Preamble

The House met at half-past Two o'clock

PRAYERS

[Madam Speaker in the Chair]

Oral Answers to Questions

NATIONAL HERITAGE

National Lottery

Mr. Miller: To ask the Secretary of State for National Heritage if he will list the sports bodies in Cheshire to which grants from national lottery proceeds have been made and the amounts given. [22464]

The Parliamentary Under-Secretary of State for National Heritage (Mr. Iain Sproat): The Sports Council has made five grants in Cheshire: Mobberley cricket club, £2,524; Macclesfield tennis club, £22,200; Davenham cricket club, £16,310; Padgate sports association, £32,402; Moore rugby union football club, £93,400. I understand that a further 15 applications from sports bodies in Cheshire are currently under consideration.

Mr. Miller: I thank the Minister for that helpful information, and I am sure that everyone in the House would want to wish those clubs every success with the use of that money. The Minister will recall that, on previous occasions, I have drawn his attention to the shortage of resources in and around my constituency, especially for junior football clubs and for athletics. Will he kindly bring

to the attention of the committee, when it considers the next tranche, the existence of that difficult position, which needs rectifying in the interests of everyone in our community?

Mr. Sproat: I thank the hon. Gentleman for his generous remarks, and I will certainly draw his comments to the attention of the Sports Council.

Dr. Spink: Does my hon. Friend agree that in Cheshire, as elsewhere, priority should be given to distributing those funds to those sporting initiatives that address as many ordinary folk as possible, rather than to focusing large amounts of money on elitist and somewhat esoteric initiatives?

Mr. Sproat: I am sure that the Sports Council takes those matters very much into account, especially where they benefit young people and deprived people.

Mr. Pendry: The Minister will be aware that the second round of lottery grants from the Sports Council to Cheshire sports clubs was slightly better than the first. Will he nevertheless recognise that the distribution of grants generally is erratic? For instance, the north-west, of which Cheshire is a part, received about £1.25 million in the latest round, whereas the south-west received more than £8 million; the east midlands received 15 grants, the west midlands two. Will the Minister involve himself in giving some direction to the Sports Council so that a fairer distribution may operate, and so that urban areas receive a better deal than is currently the case? Only then will the distribution of grants be considered credible by the public.

Mr. Sproat: No. I will not involve myself in that matter, which is a matter for the Sports Council. The House rightly decided to distance itself politically from such decisions. However, I have no doubt that, as time goes by, there will be an even spread throughout the country. The Sports Council is mandated to ensure that that is so.

Arts Funding

Mr. Rooney: To ask the Secretary of State for National Heritage when he last met the Association of


Metropolitan Authorities to discuss the funding of the arts by local authorities. [22465]

The Secretary of State for National Heritage (Mr. Stephen Dorrell): I met the Association of Metropolitan Authorities on 24 January 1995 to discuss a number of issues.

Mr. Rooney: The Secretary of State will be aware of the increasing pressure on local authority budgets and he will be aware that, sadly, non-statutory sectors are sometimes the first to suffer. Is he not worried, especially, about the danger of charges being levied for entrance to museums and similar activities?

Mr. Dorrell: The Government's policy has always been that it is a matter for individual museum organisations to decide whether they want to charge for entrance to museums. Regarding the pressure on local authority finance, the hon. Gentleman will be aware that the Audit Commission, when asked to examine the totality of local authority operations, concluded that £500 million was available to be released from excess administrative costs. I look to local authorities to release that resource to improve the quality of all the services that they are responsible for delivering.

Mr. Clappison: When my right hon. Friend meets representatives of local authorities, will he give moral support to Hertsmere borough council in its efforts to bring the world-famous Elstree studios back into film production? Is my right hon. Friend aware of the strong support among all shades of opinion and all parties in Hertsmere for the idea that the present owners of the site should sell it to someone who is interested in film production?

Mr. Dorrell: I entirely understand my hon. Friend's concern. I am sure that his hope that the site should continue to be used in the film industry to support the development of the British film industry is an ambition shared by many in all parts of the House. My hon. Friend's point underlines the opportunity that confronts the British film industry. I shall talk about that at greater length when I respond to the report of the Select Committee on National Heritage at the beginning of June.

Competitive Sport

Mr. Hawkins: To ask the Secretary of State for National Heritage what further measures he proposes to encourage greater participation in competitive sports by children in schools. [22466]

Mr. Sproat: The participation of schoolchildren in competitive sports will be a key element in the sports policy statement paper which my right hon. Friend announced on 23 March. The policy statement will be published in early summer.

Mr. Hawkins: I thank my hon. Friend for that answer. Will he give particular attention to the importance of providing sporting opportunities for schoolchildren at primary schools such as Hawes Side and Roseacre schools in my constituency? Roseacre school is an exceptionally good school, but unfortunately it has no sports field, and has never had one, as there is no land on which to build one. During his discussions about developing sports facilities for children, will my hon. Friend consider encouraging

those responsible for lottery funding to provide support for children at schools such as Roseacre to obtain facilities at secondary schools and sports centres in the area?

Mr. Sproat: I know of my hon. Friend's energetic pursuit of the interests of Roseacre primary school and I entirely agree that everything should be done to ensure that as many pupils as possible have as much access as possible to high-quality sporting facilities. I am glad to say that, from now on, I understand that the Sports Council will consider as eligible for lottery funds the purchase of a van or a minibus to take pupils to such grounds.

Mr. Enright: The Minister will have noticed that, under the present funding of schools, there has been a considerable decrease in the number of cricket pitches available. Cricket pitches are extremely expensive to maintain. Will the Minister make a special effort to ensure that extra funding is given to the annual maintenance of cricket pitches?

Mr. Sproat: The hon. Gentleman raises an extremely important point. It is true that cricket is a more difficult sport to deal with because of the size of the field and the quality of treatment that must be given to the square. I hope that the point that he has raised will be dealt with in the sports policy paper.

Cross-media Ownership

Mr. Lidington: To ask the Secretary of State for National Heritage when he expects to publish the results of his review of cross-media ownership. [22467]

Mr. Dorrell: The Government are currently reviewing their policy on media ownership. I shall announce their conclusions once the process is completed.

Mr. Lidington: Does my right hon. Friend agree that it is illogical to have a system of regulation that permits one national newspaper group to have significant broadcasting interests yet bars every other national newspaper group from having more than a small stake in broadcasting interests? Will he examine that problem in his review and seek to bring cross-media ownership more within the remit of general competition policy in a way that allows British media groups to compete with their international counterparts?

Mr. Dorrell: My hon. Friend raises one of the issues that has been at the core of the debate about the future of media ownership regulation. It would be wrong of me this afternoon to hint at the direction in which the Government plan to go. Our media ownership regulation must have two objectives: first, to safeguard plurality and diversity in our press and secondly, to allow media businesses the opportunity to develop viably and successfully.

Mr. Kaufman: Has the Secretary of State taken note of the massive deal that has been made between News International and the American conglomerate MCI? Has he further noted that BT is a 20 per cent. shareholder in MCI? Does he agree that it is plain daft to have a system in which BT, the British telephone company, is allowed to broadcast television to the United States; American telephone companies, as part-owners of cable companies, are allowed to broadcast television in this country; but BT, the British telephone company, is not allowed to broadcast television in its own country? Is it not intolerable that our major


telephone company should be prevented by restrictive legislation from becoming a part of the information super-highway in Britain?

Mr. Dorrell: The right hon. Gentleman has made that point to me before and I do not agree that it is plain daft. He cogently illustrates why the policy is right. The interests of the American consumer are served by having a choice of distributors available in the American market—that is provided by encouraging British Telecom to invest in it—and the interests of the British consumer are served by having choice in the delivery of the television signal to British homes. My right hon. Friend the President of the Board of Trade has made it clear that he does not propose to allow British Telecom into that market at present, in order to allow others to develop in competition with the long-term possibility that British Telecom offers.

Mr. Harry Greenway: Does my right hon. Friend recall the great Ealing comedies? Will he do all he can to see that they are restored by giving support to Ealing—

Madam Speaker: Order. I know that the hon. Gentleman sought to catch my eye on an earlier occasion and was undoubtedly frustrated, but he is way out of order on this question. We shall pass on to Mr. Graham Allen.

Mr. Greenway: rose—

Madam Speaker: Order. The question relates to cross-media ownership. I saw that the hon. Gentleman wished to intervene and was frustrated when Ealing was mentioned on an earlier question, but this is not the question to which it relates.

Mr. Allen: It is less an Ealing comedy than a Whitehall farce. The delay in the Government bringing forward their proposals on cross-media ownership has led to all sorts of difficulties, not least in the recent Channel 5 round of bids, where bidders were completely unaware of whether they would qualify, were their bid to win. Will the Secretary of State tell the House, and all those who are interested, whether he will reach a decision on cross-media ownership in the near future? Above all, will he put his proposals to the House before we leap into the next major series of changes—digital television? Those in the House and outside need to be clear whether new rules will be in place before the digital revolution allocates new channels, or will the Minister delay and create the Whitehall farce that was alluded to earlier?

Mr. Dorrell: I can certainly tell the hon. Gentleman that I hope to bring forward proposals both for the allocation of channels and ownership regulations in the digital world and dealing with media ownership issues among conventional media companies. I hope to bring forward proposals on both those matters within the next few weeks. The hon. Gentleman's charge of delay would hold a great deal more water if, at any time during the past few months, we had heard anything from the Opposition suggesting that they have reached any conclusions on those issues. They are very good at telling us that we have been delaying when we have been considering the issues in a mature fashion. However, we have had almost no advice from the Opposition about the way in which that policy should develop.

Arts, Suffolk

Mr. Spring: To ask the Secretary of State for National Heritage what is his assessment of the state of the arts in Suffolk. [22468]

Mr. Sproat: It is for the Arts Council and the regional arts boards to take the lead in making assessments of this kind. I understand that Eastern Arts has a high opinion of the quality and range of arts activity in Suffolk.

Mr. Spring: My hon. Friend will be aware of the great success of the Bury St. Edmunds festival in my constituency. Is he aware that, two weekends ago, the Newmarket festival took place, the highlight of which was a concert under the Association for Business Sponsorship of the Arts pairing scheme? Does my hon. Friend agree that it is now possible to hear the finest music outside the metropolitan areas?

Mr. Sproat: My hon. Friend rightly draws attention to the success of the Bury St. Edmunds festival, which is celebrating its 10th birthday and has been a wonderful success. In respect of the Newmarket festival, the first time that it was held, it was a great success. I agree that the ABSA scheme, or the pairing scheme, which has brought some £80 million of fresh money into arts in the 10 years that it has existed, has been great success. As something like 78 per cent. of the money goes outside London, my hon. Friend is quite right to say that it allows people all over the country to hear the finest music and see the finest performances.

National Lottery

Mrs. Angela Knight: To ask the Secretary of State for National Heritage what representations he has received regarding the distribution of national lottery funds to voluntary organisations for the promotion of sports facilities. [22469]

Mr. Sproat: I have received representations from a variety of individuals and organisations on the subject of national lottery funds for sport.

Mrs. Knight: Is my hon. Friend aware that the Nutbrook cricket club near Ilkeston in my constituency, which provides sports facilities for young people in particular, has recently applied to the national lottery sports fund for money to improve its changing facilities? The Sports Council has, quite correctly, asked local organisations for their views and all have been supportive except Erewash borough council, which said that the club's bid would compete with the council's own bid for sports facilities. Does my hon. Friend agree that a local authority should not be able to blight another's bid in that way? What advice can he give to Nutbrook and to the Sports Council about the matter?

Mr. Sproat: I congratulate my hon. Friend on her persistence in the matter of the Nutbrook cricket club. She wrote to me on 16 June last year about that subject and I know that she has been disappointed in one or two of her applications to the Sports Council and the Foundation for Sport and the Arts in the meantime. I assure her that whatever Erewash borough council says or does not say


will not blight the hopes of Nutbrook cricket club. The Sports Council will make its own decision about that important matter.

Mr. Illsley: Will the Minister bear it in mind that some organisations which provide funding for sports facilities are suffering because the money that was formerly distributed to them from pools revenue is falling as the success of the national lottery increases? The Barnsley lawn tennis club in my constituency is unable to secure a grant because of a lack of funds within the Foundation for Sport and the Arts. Will the Minister consider equal funding between the various bodies that provide money for sports facilities so as to make up the grants to those bodies which have been affected by the fall in pools revenue?

Mr. Sproat: The hon. Gentleman raises an important point. He will know that my right hon. and learned Friend the Chancellor of the Exchequer cut the duty in order that the Foundation for Sport and the Arts could continue to operate. I believe that that was the right thing to do and I hope that the sports club in the hon. Gentleman's constituency will apply for funding to the foundation, the national lottery, Sportsmatch or any of the other sources of Government sports facility funding.

Tourism

Mr. Barry Field: To ask the Secretary of State for National Heritage what assessment he has made of the part that tourism can play in economic regeneration. [22470]

Mr. Dorrell: Tourism plays a key role in the local economy in many parts of the country. Successful tourist development is a powerful engine of economic regeneration.

Mr. Field: Does my right hon. Friend agree that tourism provides an opportunity for real growth and that major tourist attractions can apply for funds under the single regeneration budget in conjunction with their local authorities? Will my right hon. Friend ensure that that information is made known as widely as possible, as it is a major embarrassment to the citizens of the Isle of Wight that the Liberal Democrat council did not apply for funds in the first round? That is quite extraordinary.

Ms Lynne: Oh!

Mr. Field: Perhaps that explains where the hon. Lady was for the first four questions of Question Time today; or perhaps the Liberal Democrats have already sold out to Wai worth road—who knows?
Does my right hon. Friend the Secretary of State agree that tourism offers the opportunity of real jobs in the United Kingdom, although the Luddites on the Opposition Benches have still not cottoned on to that fact?

Mr. Dorrell: I entirely agree with my hon. Friend on both counts. It is extraordinary that the Liberal Democrat-controlled county council on the Isle of Wight is unaware of the opportunities that the single regeneration budget presents—particularly, as my hon. Friend said, the opportunities that it presents for the tourist sector. My hon. Friend is correct: the tourist sector creates real jobs. In the past 10 years, tourism in Britain has created 25 per cent. more real jobs. That underlines the extent to which the

tourist sector is one of the areas of growth in the British economy which holds out future wealth-creation opportunities.

Mr. McAvoy: I agree with the Secretary of State's last statement. Bearing in mind the contribution that the tourist and travel industry makes to the regeneration of Britain, what is the Secretary of State doing to ensure that unfair taxation is not imposed on that industry, which far too often the Government regard as a milch cow for taxation?

Mr. Dorrell: That is an interesting question for the hon. Gentleman to raise. If one compares the taxation imposed on a hotel operator in southern Britain with that of a French competitor, the most striking contrast that one will observe is the increased non-wage labour costs that French taxation and the social chapter impose upon the French competitor. If the hon. Gentleman were really interested in comparing the taxes imposed on British operators with those imposed on continental operators, he would make it clear to his Front-Bench team that he opposed the imposition of such an obligation on British operators.

Mr. Forman: While it is undeniably true that tourism can economically regenerate many parts of the country, is it not also true that it can environmentally degenerate them unless it is properly controlled? For example, has my right hon. Friend any proposals to put to the Secretary of State for Transport and others about controlling the plethora of tourist buses in central London, which cause serious congestion and air pollution problems?

Mr. Dorrell: My hon. Friend raises a serious issue: the tourist industry's impact on the centres of heritage interest that attract tourists. It is obviously a short-sighted policy to promote tourism if that damages exactly the attractions that bring people to Britain in the first place. That is why the Government set up a review of exactly those issues at the beginning of the 1990s, and why my Department has followed, through the English tourist board, a programme of sustainable tourism projects, which we are in the process of assessing. The results of that will be published in the autumn of this year.

National Lottery

Mr. Gordon Prentice: To ask the Secretary of State for National Heritage if he will review the criteria used for the allocation of national lottery money. [22471]

Mr. Tony Banks: To ask the Secretary of State for National Heritage if he will change the methods by means of which national lottery funds are allocated to good causes. [22477]

Mr. Dorrell: I have repeatedly made it clear that the Government intend to keep the guidelines to lottery distributors under regular review. The allocation of lottery funds, however, began barely eight weeks ago, and therefore I am not yet in a position to revise the guidelines.

Mr. Prentice: Is the Minister aware that £680,000 of lottery money has just come to my constituency to fund a sports hall, yet that marvellous news was hijacked by the Liberal Democrats, who broke a press embargo 24 hours before the local elections, distributing thousands of leaflets in the constituency and claiming the credit? Is there not a case for reviewing this matter and ensuring that these sensitive announcements are not made during election


periods, because otherwise people like the unscrupulous Liberal Democrats will hijack them and use them for electioneering purposes?

Mr. Dorrell: In these days of propriety, it would be improper for me to intervene in the arguments between Opposition parties. What I will say to the hon. Gentleman is that the announcement of the Sports Council distribution to which he referred was made not during an election period, but on the Friday after the election period was over.

Mr. Banks: We dream of getting £680,000 of the lottery in my constituency. I do not mind if the Liberals want to make the announcement first. I am an enthusiastic lottery punter and I look forward to winning the biggy so that I can clear off to the Caribbean, but a feeling exists in the east end that Camelot is creaming off far more than we are. Would it not be possible to have local committees that could take the money that goes into the lottery locally? We could then allocate some of the resources to good causes for the localities, rather than the money coming up to central London so that a bunch of toffs can allocate it to well-heeled Tories.

Mr. Dorrell: The hon. Gentleman's ambition to win the lottery and go to the Caribbean is widely shared on his behalf. On the suggestion that there should be local committees to distribute lottery proceeds, the different lottery distributors have set up structures to ensure that they are offered advice about the local scene before decisions are made. That is why the Arts Council takes the advice of the regional arts board, and why the Sports Council takes the advice of regional sports councils in making lottery distribution decisions. However, a national lottery needs to have a distribution process that culminates in an identifiable national distributor and that is subject, of course, to all the normal propriety disciplines imposed by the National Audit Office.

Mr. Jopling: Is the Secretary of State aware that Cumbria, despite having 20 applications currently under consideration, has so far received nothing from the sport and arts fund? Will he draw to the attention of the great and good who distribute that money that Cumbria is not an offshore island and that it is time that something was done?

Mr. Dorrell: My right hon. Friend is an effective advocate of his constituents' interests. I am sure that his point will be taken on board. He will understand that a precise regional balance is not sought in each month's allocation but, taking the distribution programme as a whole, my right hon. Friend is right to say that we must ensure that proper regional balance is observed.

Mr. Jessel: Does my right hon. Friend agree that there are far too many reviews? Surely there is no need for any review of the careful, and still recent, decision of the House that one quarter of the lottery's turnover should go to the five sets of good causes—the arts, heritage, sports, charities and the millennium fund. Will my right hon. Friend refuse to listen to the whiners, whingers, complainers and other small-minded and tiresome persons?

Mr. Dorrell: I shall certainly try to avoid listening to small-minded and tiresome persons. I agree whole-heartedly with my hon. Friend that we must allow the guidelines time to work before reaching considered judgments in assessing them. I repeat my original reply—that

the Government will keep the guidelines under review. This is a new project, and clearly it is important that, as it matures, we learn the lessons of our experience.

Mr. Chris Smith: Would it not be sensible to remove the existing requirement whereby the main distributive bodies are not allowed to seek applications but must simply sit and receive them? That system leads directly to the sort of disastrous decision taken over the Churchill papers. Surely it would be more sensible to take a more strategic approach, whereby the boards could consult widely with local authorities, business, trade unions and voluntary organisations to identify gaps and a proper pattern of provision.

Mr. Dorrell: The hon. Gentleman seems slightly at variance with the hon. Member for Newham, North-West (Mr. Banks), who was anxious that there should clearly be local input in the distribution process. One of the best ways is to ensure, before a lottery award is made, that there is clear evidence that the proposal has widespread and deeply felt local support. The most effective method is to ensure that lottery money is available to support local initiatives rather than engage in a kind of "goslot", which seems to be wanted by the hon. Gentleman.

Mr. Steen: To ask the Secretary of State for National Heritage if he will make a statement as to the way in which grants from the proceeds of the national lottery will be publicised and the speed with which grants are made by the grant-making body set up for that purpose. [22472]

Mr. Sproat: The manner in which national lottery awards are publicised is a matter for each of the 11 independent distributing bodies. Distributing bodies are dealing with applications for funding as quickly as possible, given the need to ensure that their systems and procedures are robust and each application receives due consideration.

Mr. Steen: I congratulate the Government on a great success story—another one. The public would like a bit more information. Will my hon. Friend the Minister consider providing information about how much money has already been raised for good causes? The public would also like to know how much money has been given to good causes. Would it not be a good idea if the regulator published a list every month of all the awards made by the five agencies, so that the public could have a one-stop shop printout of all the awards made, without having to approach all the agencies that give them?

Mr. Sproat: From memory, I can say that £495 million has been given to good causes, of which almost £60 million has already been allocated. As to my hon. Friend's interesting suggestion of collating information about the recipients of lottery awards and their value, if that were to help the House, I would certainly agree. My Department would do that, rather than the regulator. If the House wanted that information, we would certainly be prepared to place it in the Library at regular intervals.

Ms Armstrong: Since much of the publicity surrounding the lottery and allocation from the lottery has not been helpful or in the best interests of this country and how it orders its priorities, is it not time that everything was re-examined? Many charities which have worked for years to raise money and ensure the protection of the most vulnerable in our society are now losing millions of pounds because of the way in which money is provided through the


lottery and because many people think that, instead of giving directly to charity, spending money on the lottery is okay and the charities will somehow get it anyway.

Mr. Sproat: On the first point, it is certainly true that there are lessons to be learned from the way in which the lottery is run. As my right hon. Friend the Secretary of State has said, we shall certainly be reviewing that—perhaps after the first year or whatever seems a sensible time. The Charities Board is in fact a matter for my right hon. and learned Friend the Home Secretary.

Business Sponsorship of the Arts

Mr. Heald: To ask the Secretary of State for National Heritage what steps he is taking to promote business sponsorship of the arts. [22473]

Mr. Dorrell: The Government actively encourage private sector support of the arts, particularly through their own pairing scheme, which has brought in more than £87 million in new money since 1984. The budgetof the pairing scheme was increased by £750,000 to more than £5.5 million in the current financial year.

Mr. Heald: Does my right hon. Friend agree that the business sponsorship incentive scheme has been a huge success for the Government, bringing new money into the arts? What steps will he take to extend the scheme and expand the number of businesses participating in it so that the true partnership between public and private sectors may flourish even more?

Mr. Dorrell: My hon. Friend is entirely right. I completely agree with the emphasis that he places on the issue. The pairing scheme, as it is now called, has brought in almost 4,000 first-time sponsors since it was launched and has been responsible for increasing business sponsorship over the 20 years of its operation from a vanishingly small sum to roughly £70 million a year. Business sponsorship is a vital source of support for the arts in Britain. I intend to continue to give active support to the development of the pairing scheme.

Mr. MacShane: Does the Secretary of State agree that one of the best ways to get businesses interested in the arts is to give them tax breaks for investment? I refer particularly to the film industry, in which Britain is seriously disadvantaged compared with the rest of Europe and much of the rest of the world. Labour has put forward concrete proposals, and so has the film industry. Will the Secretary of State speak to that other great philistine in the Cabinet, his right hon. and learned Friend the Chancellor of the Exchequer, and provide the British film industry—before the Cannes film festival—with the leadership that it needs so that it may develop?

Mr. Dorrell: I congratulate the hon. Gentleman on his ingenuity in getting a film tax question into a question on the Association of Business Sponsorship of the Arts pairing scheme. As the House knows, the future of tax relief for film makers was raised in the Select Committee report on the film industry, to which, as I have already said, I intend to respond at the beginning of June.

Tourism

Mr. Nigel Evans: To ask the Secretary of State for National Heritage how many tourists from abroad visited the United Kingdom for the last year for which figures are available. [22475]

Mr. Sproat: In the 12 months between March 1994 and February 1995 there were an estimated 21 million visits to the United Kingdom by tourists from abroad.

Mr. Evans: Does my hon. Friend agree that many of those visitors want to visit villages around the country because they are quiet and beautiful? Does he agree, therefore, that those drawing up structure plans ought to think twice before trying to build thousands of new houses in villages such as Whittingham and Calderstones in Whalley in my constituency which would detract from their beauty? Does he further agree that another village in my constituency might now attract many more visitors because it contains the training ground of Blackburn Rovers? Will he send his congratulations to Jack Walker, Alan Shearer, Kenny Dalglish and the rest of the team on winning the championship yesterday?

Madam Speaker: Order. The last part of that question was rather out of order.

Mr. Sproat: If it is in order, Madam Speaker, I add my congratulations to those offered to Blackburn Rovers on winning the league after 81 years. That is a fine achievement and Blackburn Rovers deserve the credit.
With regard to the first part of my hon. Friend's question, it is extremely important, particularly in the case of the beautiful villages that he described, to ensure that the needs of housing are balanced by the benefits which accrue to the tourism industry. I am aware that my hon. Friend has followed the matter very closely over many months and I congratulate him on that. I will certainly draw the important point that he has made to the attention of my right hon. Friend the Secretary of State for the Environment.

Mr. William O'Brien: With regard to the 21 million people who the Minister says visit these isles, will the Minister consider the importance of developing tourism in west Yorkshire, particularly in relation to the Yorkshire mining museum? Will he do all that he can to ensure that we have our fair share of tourism in west Yorkshire so that people can see the heritage of the Yorkshire region?

Mr. Sproat: Yes, I am glad to say that the percentage of tourists travelling out of London has been increasing. I very much support the Yorkshire mining museum and I am looking forward to visiting it again very shortly.

CHURCH COMMISSIONERS

Pension Funds

Mr. Barnes: To ask the right hon. Member for Selby, as representing the Church Commissioners what plans the commissioners have to respond to the recent report of the Social Security Committee on the operation of pension funds, the Church Commissioners and Church of England pensions. [22494]

Mr. Clifton-Brown: To ask the right hon. Member for Selby, as representing the Church Commissioners if he will make a statement on the findings of the Social Security


Committee in its second report of Session 1994–95, HC 354, in respect of the operation of the Church of England pensions provision. [22497]

Mr. Michael Alison: (Second Church Estates Commissioner, representing the Church Commissioners): The Church Commissioners welcome the view of the Select Committee on Social Security that a pension fund into which contributions are payable needs to be established and that that will help to protect the continuing scope of the commissioners to contribute towards the pay of clergy in the poorest parishes. That is consistent with the principles for future arrangements, on which discussions with diocesan boards of finance are well advanced. A report is to be made to the Church of England General Synod in the summer, following which the necessary legislation will be drafted.

Mr. Barnes: The Select Committee revealed some very serious problems in terms of Church of England pensions—£800 million losses, secrecy, recklessness and foolishness. When shall we reports and accounts for the 44 subsidiary companies, all of which are loss-making? When we deal with the matter further in the House, will the right hon. Gentleman support the notion that it should be dealt with by means of a full Bill which is discussable and amendable, rather than by a 90-minute take-it-or-leave-it statutory instrument?

Mr. Alison: On the last point, I am sympathetic towards the hon. Gentleman's idea, but it must be something to which the Church of England would agree as it has the majority interest in the issues being discussed. With regard to the pension side of the matter, I can assure the hon. Gentleman and the House that the assets of the Church Commissioners, which are now in the region of £2.4 billion, are very comfortably able to cover the whole of the past actuarial responsibilities for pensions and future pensions up to the point which is now likely to be cut off by a new contributory fund.

Mr. Clifton-Brown: Has my right hon. Friend had a chance to reflect on the full and searching debate which took place in the Chamber on Thursday night, in which it emerged that virtually every mistake in the book had occurred in the management of the Church Commissioners' funds? Does he agree that it is now urgent to establish a properly funded pension scheme so that past members of the clergy will be relieved of any anxiety that their pensions will not be properly paid?

Mr. Alison: I can assure my hon. Friend that past liabilities are very comfortably covered, as actuarially computed, by the £2.4 billion of assets in hand. My hon. Friend also referred to the future pensions liability. He will be aware that we have announced that there is to be a new contributory scheme to take account of that.

Churches

Mr. Fisher: To ask the right hon. Member for Selby, as representing the Church Commissioners what consideration the Church Commissioners give to local opinion when considering offers of purchase and change of use for churches. [22495]

Mr. Alison: The commissioners' policy is governed by the Pastoral Measure 1983. When a Church of England church is closed for worship, the Measure lays emphasis on the diocese seeking a suitable use and that is what is most commonly achieved. Each case is decided by the commissioners on its merits, taking into account the advice of their statutory advisers—the Advisory Board for Redundant Churches—the nature of the building, the options available and the views of the diocese. Dioceses are sensitive to local opinion in seeking uses. Formal objections made to the commissioners about proposed uses are most carefully considered.

Mr. Fisher: Does the right hon. Gentleman accept that my constituents in Stoke-on-Trent can see no evidence that the commissioners are seriously taking into account their views in relation to St John's Hanley, which the diocese wishes to sell to a company wishing to establish a climbing centre in a handsome church in the middle of the city? Whose interests are being served there? Will the right hon. Gentleman try to ensure that the local views which have been expressed coherently and sensibly with well thought out alternative ideas are taken into account?

Mr. Alison: The hon. Gentleman knows that the climbing centre proposal was a good deal further ahead than the Friends of St John's community centre proposal. However, the climbing centre proposal has not gone ahead and it is still fully open to the Friends of St John's community centre project to be considered fairly alongside it. No final decision has yet been taken, and the hon. Gentleman's own preference may in the event win the day.

LORD CHANCELLOR'S DEPARTMENT

Legal Aid

Mr. Hawkins: To ask the Parliamentary Secretary, Lord Chancellor's Department what further measures he proposes to control the granting of legal aid to prevent those who should not be entitled to legal aid from receiving it. [22503]

Mr. Waterson: To ask the Parliamentary Secretary, Lord Chancellor's Department what steps he is proposing to exclude wealthy individuals from legal aid entitlement. [22506]

Mr. John Marshall: To ask the Parliamentary Secretary, Lord Chancellor's Department what recent representations he has received about the proposed changes in legal aid for the apparently wealthy. [22511]

The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): The Lord Chancellor has announced the measures that he intends to take forward following the consultation exercise on the granting of legal aid to apparently wealthy applicants.

Mr. Hawkins: Will my hon. Friend take further the welcome consultation on legal aid for the apparently wealthy by urging that a further look be given at cases in which legal aid is granted to those who have a long record of previous criminal convictions when those people are taking civil cases which are often entirely unmeritorious and constitute a serious nuisance to the law-abiding people who are often the defendants in those cases?

Mr. Taylor: I shall certainly pass my hon. Friend's remarks on to the Lord Chancellor. Three of the proposals are that there should be a special investigation unit to handle complex cases, a discretionary power to include the assets of friends, relatives and children where these appear to be material to the life style of the applicant and the power to require an applicant for legal aid to transfer ownership to the legal aid authorities of any assets which he fails to declare in the application.

Mr. Waterson: Will my hon. Friend confirm that in many cases apparently wealthy people have their assets frozen by injunctions during protracted and complex litigation? Can more be done following the hopefully successful end of that litigation to extract more money back from the beneficiary of legal aid by way of a statutory charge or other means?

Mr. Taylor: I am sure that that is a fruitful line of inquiry to pursue.

Mr. Marshall: Does my hon. Friend accept that it is a source of great anger that wealthy parasites such as Ernest Saunders and Roger Levitt should receive legal aid while many people with more modest life styles are refused it? Any action that my hon. Friend takes on that front will be welcomed by hon. Members on both sides of the House and across the country as a whole.

Mr. Taylor: My hon. Friend makes his point clearly, as he has done before. I am well aware of his views.

Mr. Frank Field: Does the Minister recall a question that I asked him recently requesting that he list the top 10 barristers and top 10 solicitors' firms gaining the most from legal aid funds? As that information must exist, does the Minister think that his departmental officials are being economical with the truth when they say that they cannot produce the information for him and for the House?

Mr. Taylor: Perhaps the hon. Gentleman would like to come and see me about that. [Interruption.] I am keen that he should be satisfied about the matter, and I shall return to the Dispatch Box to put my answer on record, as the hon. Member for Brent, South (Mr. Boateng) would like it to be.

Mr. Skinner: How on earth can the Government justify handing out large sums of taxpayers' money to wealthy people such as Saunders, Selig, Levitt, the Maxwell brothers and Asil Nadir, when someone in my constituency who needs to fight a civil claim in respect of an accident at work was told by one of those tinpot solicitors that he would be looked after and get legal aid, but then halfway through he was told, "Sorry, but the case is not strong enough to win"? Not only are those wealthy people making a small fortune out of the taxpayer, but barristers and all the rest of them are raking it in because they can make a ton of money backing the wealthy but they will not make a great deal looking after some poor constituent with a civil claim.

Mr. Tony Banks: Hang all lawyers.

Mr. Taylor: Barristers can claim what they like, but they will get what is assessed.

Mr. Bermingham: I declare an interest as a lawyer, and I wait for my hon. Friend the Member for Newham, North-West (Mr. Banks) to hang me. Will the Minister not rush headlong into what could be a catastrophic situation which will cost the country money? Much is said about large cases, but in efforts to reassess legal aid will the Minister bear in mind that it is sometimes more economical to grant legal aid at first instance in the magistrates court on the very first day of charging so that a matter is speedily disposed of, rather than to wait over several hearings for legal aid to be granted, with additional cost to the taxpayer and other sources, and achieve the same result in the end? Surely expedition is sometimes profitable.

Mr. Taylor: But we cannot disregard the Comptroller and Auditor General or the Public Accounts Committee in determining the circumstances in which legal aid is granted in magistrates courts. I can reassure the hon. Gentleman that I have no reputation for headlong rushing, but he need not wait long for the Green Paper on legal aid. It will be out later this week—on Wednesday.

Mr. William O'Brien: To ask the Parliamentary Secretary, Lord Chancellor's Department when he last discussed the legal aid recovery procedure with the chief executive of the Legal Aid Board; and if he will make a statement. [22504]

Mr. John M. Taylor: I discuss all aspects of the legal aid scheme with the board's chief executive from time to time.

Mr. O'Brien: Has the Minister discussed the recovery of payments with the chief executive of the Legal Aid Board? Will he take on board the situation involving a constituent of mine? When the recovery people attended the home, because no one was at home they started making inquiries of neighbours and informing them of the situation. That was totally deplorable and unscrupulous of those agents who are employed by the recovery section of the Legal Aid Board. Will the Minister impress upon the chief executive that such practices must cease and that people should not be subjected to such humiliation in front of their neighbours because agents acting on behalf of the Legal Aid Board behave unscrupulously?

Mr. Taylor: I will gladly look at that case if the hon. Gentleman will give me the details. I am not entirely sure whether he is referring to recovery by the Legal Aid Board of costs out of winnings, contribution as agreed at the onset of the grant, or the statutory charge which operates after a case has been concluded. Solicitors are under a duty to explain to their clients how the statutory charge works so that they are left in no doubt. The application form is required to be signed by both the solicitor and the applicant on that score to say that it has been explained and understood.

Mr. Fisher: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will publish an analysis of the net income levels of those receiving legal aid in the last financial year. [22505]

Mr. John M. Taylor: I have no plans to publish the analysis that the hon. Gentleman requests.

Mr. Fisher: Will the Minister reconsider? I suspect that any analysis would confirm hon. Members' suspicions


and the suspicions put to me constantly by the citizens advice bureau in Stoke-on-Trent that a great number of applications for civil legal aid are being turned down, limited or otherwise impeded. People of quite modest means are being prevented from pursuing rightful cases because of the way in which the civil legal aid system works. That cannot be right, and I suspect that it is of general concern to all hon. Members.

Mr. Taylor: The hon. Gentleman refers to net income levels, but it would be very difficult to produce the analysis required because net income is disposable income and in the determination of disposable income many allowances can be made which will depend on the enormous variety of individual circumstances of applicants.

Mr. Clifton-Brown: On the other hand, has my hon. Friend observed the type of case that I have come across in my advice surgeries recently, involving people who have previously been reported to be wealthy but who have passed the income assessment and been legally aided by the Legal Aid Board for civil cases? That cannot be right.

Mr. Taylor: If an individual case, as my hon. Friend puts it, cannot be right, anyone can challenge a grant of civil legal aid, including my hon. Friend.

Mr. Boateng: If the Minister has no plans to analyse the income of those currently denied legal aid, does he have any plans, belatedly, to deal with the issue of restrictive practices within the legal profession? Is he aware that there has been an increase of some 600 per cent. in the cost of legal aid to taxpayers while restrictive practices within the legal profession on the part of the Law Society and the Bar Council go unaddressed? Is it not time to redress the balance of legal aid in favour of the taxpayer and the consumer?

Mr. Taylor: That must be an ever-present intention, but the hon. Gentleman should know that the number of people helped under the legal aid scheme—3.5 million in 1994–95—will increase by 25 per cent. by 1997–98. As for restrictive practices, he will know—and I invite him to welcome the fact—that under the Courts and Legal Services Act 1990 monopolies of various kinds of legal practice are being steadily eroded. He will find, I dare say, that among the legal aid proposals will be that legal aid funding will be available to law centres and citizens advice bureaux supported by him. The Green Paper will be out on Wednesday—more then.

Public Record Office

Mr. Dalyell: To ask the Parliamentary Secretary, Lord Chancellor's Department what are the procedures and criteria by which papers are transmitted to the Public Record Office. [22508]

Mr. John M. Taylor: The Public Records Acts 1958 and 1967 provide for the transfer, under the guidance of the Keeper of Public Records, of those public records which are to be made available at the Public Record Office normally when they are 30 years old. The procedures and criteria are detailed in the "Manual of Records Administration".

Mr. Dalyell: May I ask a question of which I have given the Lord Chancellor's Secretary notice? As the right hon. Member for Southend, West (Mr. Channon) certainly

acted in good faith in March 1989 when he was Secretary of State for Transport, could his background papers relating to Lockerbie be expedited to the public view, along perhaps with those of Sir Charles Powell and the then Prime Minister? Could the Lord Chancellor have a word with his colleagues in the Crown Office, who are not answerable to the House, and tell them not to be so childish in respect of the ridiculous defamation of potential witnesses?

Mr. Taylor: I am grateful to the hon. Gentleman for giving me advance notice that he wished to mention the Lockerbie bombing. However, all I can say in answer to his question is that it will be for the relevant Government Department, as advised by the Public Record Office, to decide at the appropriate time which records should be selected for permanent preservation.

Mr. Lidington: Will my hon. Friend encourage Government Departments, through the Public Record Office, to make as many documents as possible available not only on paper but on CD-ROM, microfiche and microfilm so that researchers do not always have to travel the inconvenient distance to Kew to inspect these documents?

Mr. Taylor: My hon. Friend may like to know that by the end of last year some 25,000 additional records had been released as a result of the open government initiatives. As for the advance of information technology of the type to which he refers, it is not merely inevitable but welcome.

Courts Service

Mrs. Roche: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement about the cost of the Courts Service becoming an executive agency. [22512]

Mr. John M. Taylor: The total cost of the Court Service's move to agency status is approximately £900,000, spread over three years.

Mrs. Roche: At a time of crisis in the Courts Service, with long delays and more than 10,000 complaints under the courts charter, is it not a scandalous waste of taxpayers' money when there is no evidence that it is improving access to justice?

Mr. Taylor: Far from being a scandalous waste, it is money well spent. The Government believe that generally the more businesslike focus of the agency will lead to greater efficiency, as well as higher standards of service.

Judges

Mr. Tony Banks: To ask the Parliamentary Secretary, Lord Chancellor's Department what advice is offered to judges in terms of their comments made in open court. [22513]

Mr. John M. Taylor: Each judge is independent. However, the Judicial Studies Board is responsible for the training of the judiciary. Its courses emphasise the need for care, consideration and sensitivity in court.

Mr. Banks: Does the Minister recall a letter that I wrote to the Lord Chancellor arising out of something in


the Fleet News? A Crown court judge, Recorder Mr. Nicholas M. Atkinson, told two people who were being convicted at Winchester Crown court—I paraphrase rather than quote—"I would jail you if you were wearing Chelsea kit." That was a propos nothing because, so far as I was aware, they were not in any way connected with the right hon. and learned Member for Putney (Mr. Mellor). How can a recorder say something as outrageous

and insulting to all decent Chelsea supporters as that? How does the Minister intend to call that individual to account?

Mr. Taylor: It is indeed within my knowledge that the hon. Gentleman has raised that case with the Lord Chancellor and I read those press notices as well. I am instructed to say that the Lord Chancellor will reply to the hon. Gentleman as soon as possible.

Points of Order

Mr. Paul Boateng: On a point of order, Madam Speaker. The Minister repeatedly answered my hon. Friends' questions with words such as, "Watch this space. See the statement on Wednesday," and the like. Does he intend to make a statement to the House on Wednesday? If not, why not and why does he repeatedly refer to such an announcement on Wednesday? Is it in order for him to do so when he apparently has no intention of making a statement to the House?

Madam Speaker: It is perfectly in order for the Minister to make the comments that he has made. That is not a point of order for me because I have no responsibility for the order of business on Wednesday, or any other day.

Mr. Gary Streeter: On a point of order, Madam Speaker. Given the announcement by the rail franchising director this morning that rail prices will be pegged to inflation-only increases or less during the next seven years, have you received a request from the Opposition spokesman on transport to apologise to the House and the country at the Dispatch Box for all the Opposition's scaremongering?

Madam Speaker: No.

Mr. Jeremy Corbyn: On a point of order, Madam Speaker. I do not know whether you are aware of the fact, but the Office of the Passenger Rail Franchising Director has issued a press release that is not allowed to be taken out of this country. A note to editors says:
This notice must not be taken to the USA or Canada
or to certain other European countries. Apparently, use of the notice would make the sale of British Rail's stock and services illegal within those countries because of the level of subsidy involved. It seems extraordinary that private notes should be sent to newspaper editors about what can or cannot be exported, yet the House apparently has no prospect of hearing a statement from the Minister about exactly what he is proposing on such matters. Can you help us?

Madam Speaker: Perhaps we shall have to wait until tomorrow to see whether a statement is to be made. As I said earlier, I have no responsibility for the business of this House. If Ministers wish to make statements, they always give me and the House notice in good time and the announcement is always on the annunciator screen by 1 o'clock.

Orders of the Day — Gas Bill

As amended (in the Standing Committee), considered.

New clause 1

COMPENSATION FOR DAMAGE OR LOSS CAUSED BY PUBLIC GAS SUPPLIERS

'Schedule 4 to the 1986 Act (Power of Public Gas Suppliers to break up streets, bridges etc.) shall be amended in paragraph (3) by inserting after the second word "shall" the words "as promptly as possible" and by inserting after the word "any" the words "loss caused or".'.—[Mr. Thurnham.]

Brought up, and read the First time.

Mr. Peter Thurnham: I beg to move, That the clause be read a Second time.
I am grateful for this opportunity to move new clause 1, which stands in my name and that of a number of hon. Friends and Opposition Members. It deals with the need to provide compensation for small shopkeepers, garage owners and others whose trade is disrupted when the street is dug up in front of their premises.
Under the Water Act 1989, compensation is already provided for water works and this new clause will simply bring the Gas Act 1986 into line with the Water Act to provide compensation in exactly the same way. We are not dealing with compensation for all the other utilities.
It seems surprising that that anomaly should exist—but perhaps not, when we consider the bad old days when the old nationalised industries lost money hand over fist and had to be bailed out by the Treasury. No wonder the Government resisted the making of claims by traders who were losing profit. All that has now changed and the privatised industries are making substantial profits. Instead of losing £50 million a week, they pay more than £50 million a week to the Treasury in corporation tax on the profits that they make. British Gas makes nearly £1 billion profit, and the chief executive is being handsomely rewarded for his duties.
My right hon. Friend the Minister for Industry and Energy has not only duties to ensure that the gas industry and other utilities operate efficiently but much wider duties to ensure that a fair balance is struck between the needs of the industry and those of the community at large. On the one hand, we have privatised industries with their directors and shareholders, and on the other we have the customers and the wider community.
In seeking to achieve that balance, my right hon. Friend has been kind enough to see me on two occasions. I saw him first on my own and secondly with a delegation that included my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) and my constituent, Mr. Cyril Eaton. We had with us representatives from the Forum of Private Business and the Federation of Small Businesses, from which I won a "Helping Hands" award in 1991 for providing more help to small businesses than any other hon. Member. We were also accompanied by representatives of the Association of British Chambers of Commerce.
I note that the Leader of the Opposition was in Aberdeen on Saturday, making all sorts of statements to that organisation. I am not sure whether the old or the new


Labour party is here today. To judge from the Standing Committee report, I would say that it is the old Labour party. The delegation also included representatives of North West Water, including its insurance claims manager, Mr. Aldridge, and Jonathan Rogers, formerly of Hamptons but now of Highfield Consultants.
At that meeting, my right hon. Friend the Minister was good enough to listen to the strength of the representations and say that he would keep an open mind in considering the issue further. He will recall that I raised the matter in an intervention on Second Reading on 13 March and, on 25 April in Standing Committee, my hon. Friend the Member for Rutland and Melton (Mr. Duncan) kindly raised the issue on an amendment. I could not be there as I was on the Standing Committee that considered the Child Support Bill.
When I read the Standing Committee report, it is apparent to me that the gas industry representatives have been lobbying hard. The speech of the Opposition spokesman suggests that he was quoting from them rather than representing the wider interests of small businesses. For instance, the Association of British Chambers of Commerce says that it has been trying to change the law for 20 years, and it is supported by the British Retail Consortium and others.
This matter first came to my attention through my constituent, Mr. Cyril Eaton. He is the proprietor of a greetings cards stationery business, and he suffered a great loss in trade when North West Water dug up the street in front of his shop in Kearsley. Under the Water Act 1989, however, he was able to claim compensation under paragraph 1(2) of schedule 12, which calls for compensation to be paid for any loss caused or damage done. That was confirmed in a law case in 1979 between Thames Water and Leonidis, which determined that the "losses" covered economic losses and therefore losses of profit.
North West Water says that that legislation is good legislation. It regards it as only fair that, if it causes disruption to small traders through no fault of their own, it should pay compensation for the loss of that trade. It feels that it is not only equitable but necessary to maintain good community relations. Without the legislation, it would be uncertain of its obligations. With that legislation in place, North West Water naturally tries to schedule its work to cause the minimum disruption to trade; without it, it would be under no such specific obligation.
My right hon. Friend the Minister may remember that Mr. David Aldridge, the insurance claims manager of North West Water, said that 95 per cent. of claims are satisfactorily settled and that the company does not suffer from a mass of small claims. In his letter to me of 28 February he said:
The requirement to pay compensation has, to some degree, facilitated better scheme planning and the use of less invasive construction techniques. The clarity and certainty which the statutory duty to pay compensation has also brought has reduced friction and disputes about compensation with the business community.
I should emphasise that compensation is not paid when the works are of short duration. That avoids the situation where compensation is being sought each time we carry out a small excavation in the street.

My right hon. Friend will remember that Mr. Aldridge was strongly in favour of the legislation governing the water industry and felt that it should be the rule for other utilities, certainly for British Gas.
My constituent, Mr. Eaton, was able to recover £7,000 in compensation from North West Water. However, he was amazed to find that when his trade was disrupted once again, this time by British Gas, it was under no such obligation to pay such compensation. The Gas Act 1986 allows for compensation only for "damage done" and does not include the three words "or loss caused".
If my constituent is entitled to compensation for the loss caused when North West Water dug up the street in front of his shop, it seems inexplicable that he should not be equally eligible for compensation when British Gas did exactly the same. Both events were totally outside his control. He has invested his hard-earned savings in a business, the rewards from which are limited by competition, only to have his livelihood threatened by a monopoly business, or near monopoly business, which does not face the rigours of keen competition. Why should he have to bear such an unforeseeable, unpredictable and uncontrollable cost when British Gas could so easily budget for such compensation claims on a nationwide basis? Where is the fairness, when the livelihood of my constituent is damaged while the directors of British Gas make handsome earnings, which are 50 times or more greater than my constituent can reasonably earn?
I appeal to my right hon. Friend's sense of good British justice. He spoke in Committee about a possible letter of comfort from the chairman of British Gas, about ex gratia payments, but I propose that proper statutory payments should be made, so that the matter can be dealt with properly. That is how the Department of the Environment approached the matter with the Water Act. I hope that my right hon. Friend is not tempted to listen to a "not invented here" argument from officials in his Department, who may argue that line just because the precedent was set by another Department. We are talking just about the gas industry, not about the rest of the utilities industry. The gas industry should follow the example of the water industry.
I know that my hon. Friend the Member for Southport (Mr. Banks) has already been in touch with my right hon. Friend about a particularly vicious case involving his constituents, Mr. and Mrs. Irwin. The trade of their small shop was savagely disrupted in the 13 weeks running up to Christmas and has not yet recovered, but British Gas has arrogantly dismissed all their claims. I have seen a copy of the letter sent to Mr. and Mrs. Irwin on 22 June from the chairman of British Gas, who said:
I do not, therefore, consider that there is a case for compensation.
Unless British Gas is subject to a statutory requirement, I believe that it will continue to adopt such an arrogant attitude.
Four other cases have been brought to my attention by Mr. Jonathan Rogers of Highfield Consultants, which specialises in such claims. Johnsons garage of Gainsborough lost £2,200 profits because of water works, but it was fully compensated by Anglian Water under the terms of the Water Act. Mr. Patel of Bristol and Cairneyhill garage of Dunfermline, however, have claimed compensation for substantial losses due to disruption, but both have been dismissed by British Gas,


which said that it was not interested in making any payments in either case. The letters that I have read simply repeated time and again:
British Gas in common with other utilities and authorities should adopt a consistent approach to these matters within the framework of the law. Therefore I am unable in this case to agree any form of compensation".
That is the line that British Gas takes every time.
Further cases have been brought to my attention by the Forum of Private Business. I have three recent cases before me, including two in Hampshire. In the constituency of my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell), G. Dowling and Son of Whitchurch had access prevented for seven weeks, and claimed £2,400. In east Hampshire, work took place for three months, disrupting the business of Morgan Automation. In the constituency of my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery), who has supported me in that case, Lucas Bookshop has lost £12,000 as a result of eight months of disruption from the laying of gas pipes followed by sewerage works, and £12,000 is claimed.

Mr. Iain Duncan Smith: For the guidance of our right hon. Friend the Minister, does my hon. Friend agree that, when British Gas produces its end-of-year profit figures, a chunk of the profit is transferred profit—that is to say, the small businesses that have been adversely affected have had their profit curtailed and transferred essentially to the gas company, which then declares it as its own? Therefore, in a sense, the gas company is declaring unfair profit—excess profit, which we could deal with today.

Mr. Thurnham: I am grateful to my hon. Friend for making the argument as clearly as he does. There is a straight trade-off between the profits of British Gas and the profits of small traders. There would be no cost to the Treasury; at least, I do not envisage any. We are simply considering the need for fairness and equity. That already exists in the law, with the Water Act 1989, so we are asking only for the Gas Bill to come into line with the Water Act.

Mr. Geoffrey Clifton-Brown: Has my hon. Friend thought of another aspect? If the gas industry is not required to pay proper compensation for loss of business, it will have no incentive to expedite works to minimise that loss.

Mr. Thurnham: In the correspondence that I have read, British Gas admits that it might have a liability if it were negligent, but it does not admit any liability otherwise to plan its work.
North West Water, during its representations to my right hon. Friend the Minister, did say that it did everything in its power to minimise those disruptions. It said that it regarded the payment of that compensation as part of good community relations, which it needs.
I am amazed that British Gas should take the attitude that it will not pay that compensation, which is only fair, when it is able to report substantial profits and its directors are able to make substantial earnings. They draw earnings that are considerably greater than those of Ministers, who bear far greater responsibilities, not only for the industries concerned, but for the wider interests of the community.

I should have thought that it would be in the interests of those executives of the utilities to ensure that they conduct their business in a thoroughly honourable way, bearing in mind the needs of the communities affected.
I have with me letters from the Association of British Chambers of Commerce, which tells me that it has been trying to change that law for 20 years. It wrote to me in October, saying:
we would certainly wish to lend our support to any measures which might close this loophole".
It wrote to me further on 15 March:
We welcome the opportunity to discuss possible amendments to the Gas Bill with a view…to pay compensation to traders for losses sustained for work on the public highway.
The Country Landowners Association has also written to say that it believes that
The only way in which
British Gas and other utility companies
can be obliged to respect the legitimate interests of those who are affected by their works, is to impose a liability of this nature.
There is therefore very broad support for the new clause.
I am surprised that, in Committee, the hon. Member for Clackmannan (Mr. O'Neill), the spokesman for the official Opposition, was unable to support the amendment that was tabled at that stage, and that, in considering that, all he could refer to was the Society of British Gas Industries, Electricity Association Services Ltd. and British Gas. What has the hon. Gentleman done about all the other interests that I mentioned? Is he not interested in small business? Obviously, the old Labour party, with its corporatist interests, is not paying any regard to small business, which the Conservative party has always strongly supported.
I trust that I shall have substantial support, not only from Conservative Members, but from Opposition Members. I look forward to hearing what my right hon. Friend the Minister has to say.

Mr. Martin O'Neill: The Opposition have no major objections to the new clause, but we wonder whether it is the right way to deal with the problem. We do not deny that there is a problem, but the general election will have to come and go before we are in a position to do much about it. By that time, the hon. Member for Bolton, North-East (Mr. Thurnham) will not be with us, given the size of his majority and, as far as I recall, his unwillingness to defend his seat.
The new clause, understandably, deals with the only utility that it can deal with—British Gas; it does not take on the electricity companies. The hon. Gentleman was not altogether fulsome in his presentation of the situation. As I understand it, the Water Act 1989 emanated from the Department of the Environment, which has no responsibility for business and can impose on it whatever obligations it likes.
I can only imagine that when the Water Act was passed, the Department of Trade and Industry was not consulted, or if it was, it felt that the burdens imposed on businesses by water boards' activities were greater than those imposed by gas companies. We believe that other utilities could be involved. The cable companies certainly have some obligations under the New Roads and Street Works Act 1991, but the electricity utilities are as yet unscathed. The lobby that seems to be working away in the undergrowth of British business appears to have been strangely silent at the time of the privatisation of the


electricity companies. Perhaps the hon. Member for Bolton, North-East could let us know whether representations were made about the electricity companies. I should have thought that they presented just as much of a problem.

Mr. Thurnham: The hon. Gentleman said that he thought that electricity companies represented just as much of a problem. Does he not accept that the scale of disruption is generally greatest with water or sewerage works, and, secondly, with gas works? Cable laying is a quick matter, which is here today and gone tomorrow, and is unlikely to give rise to such claims.

Mr. O'Neill: I am not competent to pass quite as swingeing a judgment as the hon. Gentleman, who may well have greater experience of the electricity industry than me. I am under the impression that the regional electricity companies and others spend a great deal of time digging up roads. If their stories are to be believed—I have no reason to doubt them—they invest a great deal of money and effort in improving the quality of electricity connections. One would have thought that they would be engaged in such activities, especially in built-up, urban areas.
There is a legitimate case for legislation, but it would be wrong to deal with only one utility. It would be far more sensible to deal with them all at once so that they could be treated fairly and with due weight.

Mr. Richard Shepherd: The Water Act has done that.
Does not the hon. Gentleman feel for the small businesses and other businesses affected by a statutory undertaking with monopoly powers? Businesses are damaged—what is his remedy while we have the Bill before us?

Mr. O'Neill: We should deal with the problem in the context of all the utilities; it is not appropriate to take one at a time. We clearly did not take one at a time in the case of water—the Water Act came from the Department of the Environment, not the Department of Trade and Industry. I suspect that the DTI was not consulted at the time. As yet, the voluminous correspondence of the hon. Member for Bolton, North-East with everybody and anybody has uncovered nothing. I discovered that with some simple research.
The Labour party is not prepared to go into the Lobby in support of the new clause, if it reaches a vote. If any of my colleagues wish to do so, that is their decision, but the Opposition do not consider that it is the right time for such a new clause.
It would be more appropriate to deal with a number of cases together. Indeed, there is relevant legislation. The New Roads and Street Works Act 1991 covers certain aspects of the issue. I do not know whether the hon. Member for Bolton, North-East, who claims credit for being the most helpful person on those matters, was involved in that legislation. That would have been the obvious time not just to take into account the important matters of the individual safety of pedestrians or of road safety, but to protect the interests of businesses.
We are not in government—that is a pity—and the hon. Gentleman claims credit for having influence elsewhere and being able to speak to Ministers, but it seems that

Ministers are influenced by him about as much as I am. That is regrettable; perhaps it is due to the manner in which he advocates the case that he puts forward.
The Opposition recognise that there is a problem, but we do not consider that it will be resolved to any extent by the new clause, because other industries are just as important and should be dealt with just as expeditiously. Unless they can be dealt with at one time, we not consider it necessary to deal with them at all.
This evening, we want the Government to say something far more conclusive than what they said in Committee. Frankly, I am not prepared to advocate that my hon. Friends support the new clause, if there is a vote. It is up to the hon. Gentleman to make his own judgment as to whether he wishes to put it to a vote.

Mr. Duncan Smith: I have been listening carefully to the hon. Gentleman. In principle, he agrees with the logic of the new clause, but he cannot support it in respect of the Gas Bill. Surely the Opposition should take a position on the issue if they agree in principle, as they allege. They must seize the initiative whenever it arises, as all legislators must do, and surely this is the moment to do so. I do not understand how the hon. Gentleman can agree with something and then say that the Opposition do not support it. It makes no sense.

Mr. O'Neill: I repeat our position. As far as we are concerned, the role of public utilities in interfering with people's businesses and the damage that that can cause businesses, especially when they dig up roads, should not be dealt with on a utility-by-utility basis. The Water Act dealt with it in that way primarily because the measure came from a different Department. Since then, there has been other legislation that the Government have singularly failed to utilise.
It is possible that an incoming Labour Government would re-examine the matter on a comprehensive basis, but the approach of Conservative Members, in seeking to use such a narrow issue to deal with a far broader problem, is quite understandable in view of the general campaign that utilities which cause damage to businesses should be subject to the law, as they are not at present. However, we are not prepared to take one utility alone. We would want the cable industry, electricity and gas to be taken together as the three utilities that are, as yet, outside the law. Until they can all be handled at once, this is the wrong way to go about it, so we are not prepared to support the new clause.

Mr. Richard Shepherd: I am truly confused by the speech of the hon. Member for Clackmannan (Mr. O'Neill). Presumably, on the basis that there was not a universal all-industry approach to the problem, we would not even have had the relevant clause in the Water Act, which is important to many small businesses.
I must declare an interest in the debate. I was a small grocer before I came to the House, and my brother now runs the company that I founded. The Water Act saved part of our business by allowing compensation to be paid to one of our shops for the lengthy barricading of its premises.
The public utilities—which are very much in the Opposition's searchlight as to their management, pay and the way in which dividends and shares are handed over to directors—have enormous powers. They are common-or-garden utility companies that serve local


areas as monopolies. The prices they fix, subject to the regulator, are effectively monopoly prices. They can demand all their costs back through the price mechanism, and very few competitive businesses in the world can demand the return of any level of costs through that method.
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We have seen how the utility monopolies look after themselves—through the boards that overpay themselves, share deals and so on. I commend my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for proposing the new clause and I commend those across the country who support it; it seems to be a case of the little people against the monopolies. Under the new clause, public utilities are asked to have regard for the way in which they conduct their business.
In the case of the shop that I mentioned, the southern end of a major thoroughfare—Sloane street in London—was dug up in order to improve the supply of water to London. No one disputes that that action was necessary, and the water board acted in an exemplary fashion. Therefore, should there not be like treatment across the board for all statutory undertakings that have monopolies in local service provision? Why should the water industry quite rightly pay compensation for loss of business and damage done to small employers—who are often sole employers—but the gas industry be saved that expense?
I do not believe that the Opposition are fundamentally opposed to such a payment. I did not understand the comment by the hon. Member for Clackmannan about the curious way in which the measure should be bundled up to apply across the spectrum. The House has a means of addressing the second most important issue—after water, as my hon. Friend pointed out—confronting business people in this regard. Digging up roads in front of business premises can make people bankrupt; that is the essence of the matter.
I do not honestly believe that the Government can oppose the payment of compensation. It seems to me that it is a typical case of a monopoly utility company effectively writing a large section of its own legislation in a trade-off between Whitehall and the monopoly interests involved. That has occurred in the past. For example, British Telecom had a duopoly policy in the old days. In the early stages of the policy's development—which is all that I am alluding to—British Telecom had to fight a fierce battle for the British market. There was a secret agreement about that duopoly, whereby the second company was limited to only 3 per cent. of British Telecom's revenue. That was nonsense, so the Government developed that policy until we reached a more satisfactory arrangement.
I cannot conceive of an argument that requires the Government to treat the new clause in any but the most sympathetic manner. I suggest that the Government do so, as millions of small business men and women and their employees are fed up to the teeth with the arrogance of the utility companies and the often incomprehensible manner in which local utility companies that provide the necessities of life treat businesses and consumers.
There will be no cost to the Treasury. In writing legislation, the Government have the opportunity to consider very carefully whom they represent and to take amendments on board. The vitality of small businesses is crucial to the nation's vitality. That is why the

Government should listen very carefully to my hon. Friend's argument in proposing the new clause and should not pay any heed to the Opposition spokesman, who wants to postpone a remedy that can be effected immediately in the Bill.

Mr. Peter Hain: The Conservative Members who have spoken have both made strong cases on behalf of small businesses. All of us who have experienced the difficulties faced by small businesses when confronted with works outside their premises will have a lot of sympathy with them, and I think that that sympathy crosses the House, but I want to address some specific points to those hon. Gentlemen and to ask the Minister whether the new clause is the best way to handle the matter.
From reading the new clause, it seems that its consequences would be to impose unquantifiable risk, not so much on TransCo, which could simply pass the risk on to customers through pricing flow-throughs, but on subcontractors, who often are also, if not small businesses, at least medium-sized businesses. They would have to carry the liability, which may well be reflected in the ultimate price that we pay for gas through the pipeline.
The way in which the new clause is phrased and its impact will impose that unquantifiable burden of risk on subcontractors in particular, who are now the norm in the competitive, deregulated regime to which the gas industry is subjected. A technical problem therefore exists in relation to the way in which the new clause has been phrased.

Mr. Thurnham: Perhaps the hon. Gentleman could just clarify his point? I am not aware that water companies, which of course use contractors, as every other utility does, face the difficulties to which he has alluded.

Mr. Hain: The water industry legislation, as the hon. Gentleman will find when he reads it, applies somewhat differently. That underlines the point, which I repeat, made by my hon. Friend the Member for Clackmannan (Mr. O'Neill). The issue needs addressing in relation to all the privatised utilities, local authorities, and highways agencies. The impact on small businesses of such street works is significant. The problem is best dealt with in a comprehensive rather than piecemeal fashion, which could create knock-on effects that are technically flawed. We have here, as it were, a backlash from Conservative Members against the very privatised utilities for which they were responsible. They privatised gas and they are backing this flawed and fundamentally wrong competition Bill. They are the ones who initially created privatised monopolies; now they are screaming at the consequences.

Mr. Richard Shepherd: I shall not go into the hon. Gentleman's exegesis of the Gas Bill. He makes some assumptions or hypotheses. Is he aware of any problems over the same sort of clause in the Water Act 1989?

Mr. Hain: I am not aware of any such problems in the Water Act. I have had many experiences such as those referred to by the hon. Gentlemen in relation to the Water Act. I am simply saying that, in relation to the Gas Bill, the way in which the new clause applies will impose unquantifiable risk on subcontractors in particular. The matter should not be handled in this way. It should be addressed on a comprehensive basis. If the hon.
Gentleman and his hon. Friend persuaded the Minister to introduce legislation to deal with the problem, we would all be sympathetic to it.
The question of cable companies should not be tossed lightly aside. They are also responsible for a great deal of disruption. Where franchises are held by cable companies—they are making great strides in the city of Birmingham, for example—there is considerable unease and impact on small businesses in particular. The issue needs to be addressed, therefore, on a general, not piecemeal basis.

Mr. Matthew Banks: I shall speak briefly to the new clause. I listened carefully to the remarks of the hon. Member for Neath (Mr. Hain), but he did not satisfactorily explain why the burden would fall on subcontractors. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) referred to a case in my constituency, mentioning Duke street and my constituent Mr. Irwin. If British Gas had a duty placed upon it to compensate for loss of earnings in that case, I have no doubt that instead of weeks and weeks going by—during which time the British Gas contractor involved was seen spending time in the local pub—there would have been a greater sense of urgency on the part of British Gas to tackle the subcontractor, to tell him to get on with the work. The Berlin wall created around that particular business, which prevented access by the public, would have been done away with and life would have returned to normal.

Mr. Bernard Jenkin: The hon. Member for Neath (Mr. Hain) felt there was some irony in Conservative Members proposing this amendment. Is not it much more ironic that Labour Members are blocking an amendment to serve the consumer—perhaps against the interests of a nationalised industry? Conservative Members are following a long and honourable tradition of making public services responsive to the public.

Mr. Banks: My hon. Friend makes a perfectly pertinent point in a satisfactory way. We are concerned about the individual, and those of us who put our names to new clause 1 are addressing that concern now.

Mr. Kevin Hughes: rose—

Mr. Banks: I will not give way because I am developing my theme, and I want to speak briefly.
The hon. Member for Clackmannan (Mr. O'Neill) was ahead of his party when he replied to Royal Navy debates as Labour's defence spokesman. Labour got itself into a bit of a pickle over Trident and nuclear policy. I do not believe that the hon. Gentleman, in his heart, entirely agrees with everything that he said at the Dispatch Box this afternoon. How long will we have to wait for a Labour Government? A long time, I suspect. We heard nothing from the hon. Member for Neath about his concerns for the individual and small businesses.
In the case to which I am referring, which has endured for many months if not years, the business has virtually gone bust. The individual has almost lost his business and he may lose his home. I will briefly describe the circumstances of that case, on which my hon. Friend the Member for Bolton, North-East touched. A major gas

main needed work and the British Gas subcontractor built what I can only describe as a Berlin wall around the business in question. I observed that over weeks because I happen to live nearby, in Duke street. The work started in the summer of 1993 and it was still continuing after a lengthy recess. When the House returned in the autumn of 1993, I took up the question of compensation with British Gas but did not get anywhere. I met yet another brick wall. Constructively, I arranged a meeting at my home across the street between representatives of British Gas, my constituent Mr. Irwin, and his accountant and legal adviser. After lengthy correspondence, I received a letter from British Gas saying that it had considered even an ex gratia payment, but the answer was firmly no.
To cut the story even shorter, I took the matter up with head office. I was told all too often about the rights of British Gas, but there was never much mention of its responsibilities. All too little attention was paid to the rights of my constituent, who had suffered so badly. I was told clearly by British Gas that it had no liability to make reparations. In financial terms—I choose my words carefully because the last thing that I wish to do is embarrass a constituent of mine—the amount of money of which we were talking was absolutely tiny in the big swim of things. It would not matter, however, if it were £5. If somebody has not got much and is trying to keep his business together, £5—or £10,000—is everything.
I was still not satisfied at that stage so I sought a meeting with the chairman of British Gas. Four weeks after I first contacted him, I received a reply. There would be no meeting. My hon. Friend the Member for Bolton, North-East quoted from a letter of 22 June, in which Mr. Giordano told me:
I do not, therefore, consider that there is a case for compensation.
Yet the subcontractor working on behalf of British Gas had ring-fenced, with the Berlin wall that I mentioned, his entire business. Nobody could get to it. None of the passing trade could stop, even though there was a large area nearby where cars could pull in. It was a disgrace.
That is but one example in my constituency. My hon. Friends have referred to other examples and there are many other such instances in the country. The case to which I have referred is—I think—one of the worst, and I regret that it has happened in Southport.
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Even though, as Member of the House, I believe that very often we try to legislate too much—I often take the view that we should legislate a little less rather than a little more—I have no doubt whatever that at the very least a proper code of practice should be developed by British Gas to deal properly with the case to which I have referred and other such instances. At the moment, there is no statutory obligation on British Gas. It has taken a line from which it will not waver. I very much hope that my right hon. Friend the Minister will accept the broad thrust of my argument. If we cannot legislate today, we need a proper, effective code of practice to help the little man in the street, my constituent, small business men and women and individuals in their homes who have suffered.

Mr. Nick Harvey: I shall not detain the House long because the hon. Members who have put their names to new clause 1 have made their case well. Indeed, it is clear from the comments of hon. Members of all


parties that there is much sympathy for the underlying point that the new clause tries to make. I think that all hon. Members have seen people at their constituency surgeries or have been contacted through the post in connection with the sort of circumstances about which we have heard.
I listened with interest to the comments of the hon. Member for Clackmannan (Mr. O'Neill), the Opposition spokesman. I agree that such obligation would be ideal across all the utilities, but I am surprised that he extrapolates from that the need to oppose the new clause. His argument suggests an element of two wrongs making a right. Whichever party wins the next election, legislative opportunities to address such a point will not present themselves every day. There is an opportunity here and now to do something about the wrongs that will occur in the gas industry.
In my constituency a great deal of trade is seasonal. On occasions, the gas board has not been as sensitive as it should have been and has carried out work throughout the summer season that could have been dealt with equally well during the winter. If the Bill contained new clause 1, it would be more sensitive to such considerations in future.
The hon. Member for Neath (Mr. Hain), who suggested that resultant additional costs might end up being passed to us in our gas bills. I do not believe that, in the current circumstances, that is particularly likely, because there seems to be plenty of profit to pay for such costs. But that might not always be so. If costs were to end up on our gas bills, however, it would probably be right and just. If gas is being supplied at a price that involves small businesses being disadvantaged unfairly, it would probably be better, even if costs were passed on to the gas consumer, that consideration for small businesses ended up on our bills. In the current circumstances, however, I do not believe that that would happen.
If the hon. Gentleman decides to press the new clause to a Division, I hope that Opposition Members will support it. As five Conservative Members have added their names to the new clause, and bearing in mind the parliamentary arithmetic as it is at the moment, we might have a very interesting vote on the new clause. I wait with interest to see whether the hon. Gentleman will press his new clause to a Division.

Ms Ann Coffey: If the hon. Member for Bolton, North-East (Mr. Thurnham) presses his new clause to a vote, I would be happy to vote for it. I hope that he does press for a Division, because there are probably a sufficient number of Conservative Members who have added their names to the new clause for him to win.
We could legislate today and ensure that the proposal is accepted if the hon. Gentleman presses his new clause to a vote. I would be interested in his explanation to the people on whose behalf he has campaigned if he does not press the new clause to a vote. At the end of the day, whether the proposal is enacted depends on the attitudes and votes of hon. Members. The hon. Gentleman has an opportunity today to test that. I assure him that I would support his new clause and I look forward to his pressing it to a vote.
The hon. Member for Bolton, North-East represents a north-west constituency, as I do. I am aware, as he is, of the problems that public utilities cause in pursuing their

improvements. Part of the problem is that the gas board can dig up a pavement or the frontage of a small shop and then be closely followed by the electricity board, British Telecom and, to finish it off, the cable companies. The argument that the proposal should be comprehensive is very good, because small shops obviously do not suffer from the problems caused by just one utility.
I agree that a great deal of the problem relates to the supervision of subcontractors, for whom British Gas must bear the responsibility. A problem that has been raised with me in my constituency relates to subcontractors beginning work at the crack of dawn and disturbing a client's access to a shop with very little warning.
Another problem that has been raised with me is that of reinstatement of work. Although the utility has six months in which properly to reinstate a frontage, which is the responsibility of the shop owner to maintain and not the responsibility of the highways authority, the frontage is sometimes left in a mess, which particularly deters old people from visiting the shop, and that may result in a loss of business. If British Gas had a statutory responsibility to make recompense in those circumstances, it would be a great deal more careful in organising that work and supervising its subcontractors. That would be helpful for everyone concerned.
The hon. Member for Bolton, North-East said that the issue was backing small business against big business. I hope that the Minister for Industry and Energy has noted the hon. Gentleman's comments. I wait with interest to see whether the Minister will back small business against big business and whether, after the Minister has replied to the debate, the hon. Member for Bolton, North-East will be able to back small business against big business. I hope that he will press his new clause, because it would be very welcome in the north-west.

The Minister for Industry and Energy (Mr. Tim Eggar): I thank my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for bringing this issue to the attention of the House. As he made clear, he has had two formal meetings with me and several less formal meetings. In addition, my hon. Friend the Member for Southport (Mr. Banks) brought a particularly serious constituency case to my attention. I am grateful for that.
We all recognise that the role of the utilities is extremely important. We all rely, in one way or another, on their work and we recognise that, from time to time, it will inevitably involve disruption to streets and common services. It was because of that that the Government introduced the New Roads and Street Works Act 1991 which resulted in the adoption by British Gas of detailed service standards.
It might be helpful if I describe those service standards. There should be notification of major works 20 working days in advance; pedestrian access to all premises while work is in progress; signing and guarding of the works with details of a telephone contact number should problems arise; leaving the site safe and tidy at the end of each working day; and reinstating any excavations promptly when the works are finished.
When we considered the 1991 Act, we specifically looked at the case for a general right to compensation for economic loss which arose from street works, and we came to the conclusion that such a provision would be wrong. The main reason for that was the general principle which underlies the use of streets. Successive


Governments have taken the view that businesses should not have a right in law to any particular given level of passing trade, and that traders must take the risk of loss due to temporary disruption of traffic flows along with all the other various risks of running a business.
That is an important principle. If one did not have that enshrined in law, where would it stop? Streets must be resurfaced from time to time, they can be made one-way and they may have to be closed. The emergency services can affect traffic also. I stand by the basic principle that the risk of disruption to access along streets must be a risk which a business runs on a normal day-to-day basis.

Mr. Richard Shepherd: Does not the Water Act 1989 confound the very principle which my hon. Friend is enunciating? We are trying to address the present piecemeal circumstances, and the Bill will place consequential losses upon traders through loss of trade. All that the House is asking is that the Government remedy that. To talk about a general principle on street works related to an earlier Act may be an interesting sideline, but we are confronted with a real problem. How are we to address it? We think the principle adopted by my hon. Friend the Minister is wrong.

Mr. Eggar: I understand my hon. Friend's passion. With regard to the provisions of the Water Act 1989, that is a different case which relates not just to street works but to general economic loss on land not associated with streets. It is the provisions affecting the water industry which are anomalous. My hon. Friend should know the dangers of arguing from the particular to the general.
I stick by the principle. Nonetheless, my hon. Friends the Members for Southport (Mr. Banks) and for Aldridge-Brownhills (Mr. Shepherd) have said that we have a practical problem. The issue is how we address that problem. I have been prompted by the initiative set up by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), and I have been particularly influenced by the constituency case raised by my hon. Friend the Member for Southport.
I have been in active discussion with the chairman of British Gas to see whether we can develop a way forward which deals with the cases that bear unreasonably upon small businesses. Mr. Giordano has suggested to me in a letter—which I shall place on record through the means of a written reply—that British Gas is going to revise the existing procedures of its transportation arm with a view to improving communication and co-operation with the owners of commercial premises. British Gas will discuss with individual business owners issues such as vehicular access, customer access, special notification and any special requirements which a particular business may have.
Beyond that, and subject to certain conditions which are laid out in the letter, British Gas has given an undertaking with regard to exceptional cases affecting businesses with a turnover of less than £500,000. That is British Gas's definition of a small business, which covers about 90 per cent. of businesses in the United Kingdom. Where such small businesses have a severe and clearly established loss of business for more than a month as a direct result of stre6t works carried out by British Gas or its agents, British Gas will sympathetically consider claims in respect of financial loss on an ex gratia basis.
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Having listened to the particular cases that concern my hon. Friends the Member for Bolton, North-East and for Southport, and also taking into account cases that have been brought to my attention through other means, in particular following my discussions in a formal meeting with my hon. Friend the Member for Bolton, North-East, it seems to me that the undertaking from British Gas, to which the Government expect it to adhere in an appropriate way, will meet almost all the cases of which we are aware have caused concern on a constituency basis.

Mr. O'Neill: From what I can gather, there will be no admission by British Gas of any liability of an ex gratia character or the rest. Will the Minister look at the draft standard conditions as they apply to public gas transporters' licences? Condition 14 of the standards of performance provides for compensation for consumers. If, in the course of the extension of the distribution system, standards are not adhered to there will be compensation.
Will the Minister consider the licence as a means of securing an obligation? If he is not prepared to accept the "blunt instrument" of an amendment to the primary legislation, he might want to do so through the fine-tuning facility that is afforded within the conditions of the licence. That would impose an obligation upon the licensee, in this case TransCo, which is most likely to be digging up a road. The licence already contains a reference to compensation when standards are not met. I think that that is what hon. Members are talking about.

Mr. Eggar: Without studying that condition with care, I think that I am right in saying that it does not cover that set of circumstances. This Government and previous Governments have believed that the basic principle that underlies the 1991 Act is appropriate. None the less, we recognise—this is why I have entered into discussions with the chairman of British Gas—that, in a small number of instances, the cost of those works, despite the 1991 Act and all the additional undertakings that TransCo has given, may bear unreasonably on small businesses.
We think that the best way of dealing with that—this is why we have discussed it with British Rail—is on a case-by-case basis. In practice, the undertakings that have now been given by the chairman of British Gas, to which we expect British Gas to adhere, will deal with almost all the cases that have been brought to my attention by my hon. Friends and through other means.
For those reasons, I cannot go along with my hon. Friends and accept the new clause. I pay tribute to my hon. Friend the Member for Bolton, North-East for the enthusiasm and dedication with which he has—

Mr. Duncan Smith: Will my right hon. Friend give way?

Mr. Eggar: If my hon. Friend really wants me to give way.

Mr. Duncan Smith: I am grateful to my right hon. Friend. I know that he wishes to wind up the debate, and I understand the reasons for that. However, there is a serious problem with the note from British Gas. If it has defined the size of business that it will compensate, are we not now in grave danger of shuffling off the responsibility to legislate and make that a fact, and passing it across to the courts of law? Should somebody


who has a business worth more than £500,000 turnover now wish to be compensated, he will have to take redress through the courts to say that British Gas has no right to define him out of such compensation because his loss is no less great than that of a business below £500,000. We could resolve that today by making that a certain fact in legislation.

Mr. Eggar: I thought that I had made it clear that the Government were not prepared to move away from the basic principle behind the 1991 Act. I have sought to deal with the specific nature of the problems brought to my attention by my hon. Friends and others. I am confident that the letter from British Gas deals with almost all the practical cases that have been brought to my attention, and I am sure that British Gas will seek to live up to the spirit as well as the letter of the chairman's communication to me.

Mr. Thurnham: I have listened carefully to my right hon. Friend and thank him for the great attention that he has clearly given to the issues presented to him. I am a little disappointed that he is not able to accept the new clause, but it was always apparent that there were difficulties in his Department about accepting legislation affecting one utility which some people might then feel should be extended to further utilities.
I have not yet had an opportunity to read the letter from the chairman of British Gas. Clearly, I should like to see it before coming to a conclusion about how the proposals would work, but I welcome my right hon. Friend's reassurance to the effect that he feels that they would deal with most of the problems that might arise. I shall, however, reserve my opinion until I have seen the letter and perhaps discussed it with those who are anxious that the new clause should be accepted. Perhaps there will be an opportunity for the matter to be discussed in the other place if it is felt that the letter does not go far enough in responding to our legitimate concerns.
I listened with amazement to the speech of the hon. Member for Clackmannan (Mr. O'Neill). He seems to think that, because his party was asleep during the passage of the New Roads and Street Works Act 1991, he can pretend that there is nothing he can do now. He might have missed his opportunity then, but he has a perfectly good opportunity now. However, he seems to have chosen not to use it. The hon. Gentleman was followed by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) who made an excellent speech. He spoke with great feeling as someone whose small business had been affected by street works. I am sure that the whole House sympathises with his position.

Mr. Richard Shepherd: As I have already said, I am grateful to my hon. Friend for tabling this important new clause. I do not think that the problem has been dealt with by a letter from Mr. Giordano or see how it places a statutory requirement on British Gas. Nor do I understand how it will lead to compensation. The House itself has wrestled with the definition of a small business, but it seems that British Gas deems it appropriate to define it as one with a turnover of £500,000, or whatever the figure was. I did not hear the figures given for the water companies or what level of compensation they have had to pay, but, if we wait on crystal mountains or behind

ministerial doors for bad news from small businesses, we shall be in some difficulty. Truthfully, I do not think that a letter from Mr. Giordano is sufficient in this instance.

Mr. Thurnham: My hon. Friend makes it clear that there are still doubts. Until I have seen the letter, it is difficult to comment further.
I think that, having listened to the speech of the hon. Member for Clackmannan, British Gas shareholders will be delighted with the work done by its directors and other representatives. The hon. Gentleman could not have done better had he spoken as a representative of British Gas.
I could make little sense of the speech of the hon. Member for Neath (Mr. Hain), who seems blind to the benefits of competition. No doubt if he had his way, the gas industry would still be nationalised and there would be no money with which to pay compensation anyway.

Mr. Hain: rose—

Mr. Thurnham: I think that we have heard enough from the hon. Gentleman.
I thank my hon. Friend the Member for Southport (Mr. Banks) for his truly excellent speech. He put his constituent's case very well. Clearly, the case that he outlined today had struck home as my right hon. Friend the Minister had earlier considered it personally and brought it to the attention of the chairman of British Gas for a second time. Obviously, this code of practice would be one important way of dealing with the issues if we do not have legislation.
I was pleased to hear the speech of the hon. Member for North Devon (Mr. Harvey), which again illustrated the benefits of competition. Clearly, the other Opposition party made a better case of addressing the issues than the official Opposition. To that extent, I wish the Liberal Democrats well and hope that they will continue to compete and to stir up some more realistic attitudes on the Opposition Benches.
I listened carefully to the hon. Member for Stockport (Ms Coffey) and thank her for her offer of support for the new clause if it comes to a Division. I am tempted to go to that point, so that we can illustrate the extent of the support for the new clause, but in considering whether to beg leave to withdraw it, I bear in mind the need not to over-embarrass Labour Members, as it is clear that early on a Monday afternoon not many of the colleagues of the hon. Member for Stockport would be around—

Mr. Kevin Hughes: About half an hour ago, the hon. Gentleman was championing the cause of small businesses, only to dump them and let them down 40 minutes on. He has chickened out and he will not push the matter to a vote. It is the hon. Gentleman's side that is opposing the new clause, not the Opposition.

Mr. Thurnham: I can only assume that the hon. Gentleman's remarks were addressed to his Front-Bench colleagues and that they will listen to him. It is interesting that there are considerably more Conservative Members than Labour Members in the Chamber this afternoon. Obviously, the former are concerned about the gas industry and the position of small businesses when compensation is called for, whereas I can see only half a dozen Labour Members and a sole representative of the Liberal Democrats in the Chamber.

Mr. Hain: rose—

Mr. Thurnham: We have already heard enough.
I thank the House for the opportunity to debate the issue at some length. It is now clearly on the record and there will be an opportunity for us to study the letter from the chairman of British Gas. If the concerns that we have aired still exist, I have no doubt that many people will press Members of another place to raise the matter when the Bill passes from this House.
The Bill as a whole is excellent and in principle I wish it all possible success. I thank my right hon. Friend the Minister for Industry and Energy for going as far as he did in addressing my concerns and seek your leave, Madam Deputy Speaker, to withdraw the new clause.

Madam Deputy Speaker (Dame Janet Fookes): The hon. Member does not need my leave; he needs that of the House. Is it the House's pleasure that the new clause be withdrawn?

Hon. Members: Aye.

Motion and clause, by leave, withdrawn.

New clause 2

MATTERS TO BE TAKEN TO BE TAKEN INTO ACCOUNT BY DIRECTOR IN EXERCISING POWERS TO CONTROL GAS PRICES

'(1) The Secretary of State shall from time to time issue guidance to the Director as to the matters he is to take into account in exercising any powers specified in the conditions of a licence granted under section 7 or 7A of the 1986 Act to limit, vary or otherwise control the charges set by a licence holder for the supply, transportation or shipping of gas.

(2) Guidance under subsection (1) above shall include as one of the matters to be taken into account by the Director a reference to the extent to which the remuneration of the executive and non-executive directors of a company which holds such a licence reflects the performance of that company during the year preceding the year to which the remuneration in question relates.

(3) In subsection (2) above—
remuneration" includes any salaries, fees, benefits in kind or share options; and "performance" includes increased efficiency in the carrying on of the activities to which the licence relates and improvements in the standard of service to consumers.'.—[Mr. Nigel Griffiths.]

Brought up, and read the First time.

Mr. Nigel Griffiths: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this, it will be convenient to discuss amendment No. 54, in clause 8, page 12, line 41, at end add—
'(3) Standard conditions under this section shall include a duty on the part of any company which is the holder of a licence under section 7 or 7A of the 1986 Gas Act to publish annually details of the remuneration of the executive and non-executive directors of that company, including any salaries, fees, benefits in kind and share options.'.

Mr. Griffiths: The new clause and the amendment deal with some of the key issues that concern the public about gas and the other privatised utilities—corporate greed, boardroom bonanzas and lack of restraint, in spite of the preaching of restraint from somewhat unusual Conservative circles.
New clause 2 would give the President of the Board of Trade powers to issue guidance to the Director General of Gas Supply. The Secretary of State shall and must take some responsibility for ensuring that payments in the

boardroom are not completely disproportionate to the performance of the company or the service to consumers. The present director general must be given powers to take certain actions with regard to the remuneration of executive and non-executive directors and the company's performance during the year.
The definition of remuneration in the new clause includes all those things about which we have been reading—not merely at the weekend and in all the editorials today, but in months and years past—but nothing has been done. The definition includes salaries, fees, benefits in kind and share options—the raid on the bank by far too many of those executives. Just as important, performance must include the efficiency of the organisation in carrying out its duties to the public, as well as improvements in the standard of service to consumers.
The new clause also gives the Government the power to tell the director general to take into account the level of executive pay in British Gas when fixing prices for consumers. I hope that the new clause will send a warning to the bosses of all the other utilities that Parliament will not sit back and watch them indulge themselves in the sort of boardroom greed that has brought the utilities to a level of disrepute that they have never suffered before.
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The new clause will ensure that those who complain, such as the hon. Member for Southport (Mr. Banks), who is not in his seat but who has written letters to the chairman of the company, are not powerless in the face of unsatisfactory replies. There must be a crisis of confidence in gas when it takes not a member of the public or even a Member of Parliament to get a suitable response from the chairman but the Minister responsible for key powers over British Gas. That in itself is an indictment.
In the past four years, the performance of British Gas has not presented a glowing picture. Pre-tax profits have declined, earnings per share have been reduced from 21.7p to 13.9p, and the return on capital has reduced from 7.3 per cent. to 5.4 per cent. Indeed, as the company states in its briefings, it has lost 60 per cent. of its industrial customers; so it is not a glowing success story, but one that should be sending shivers down the spines of all shareholders.
When I attend the annual general meeting of British Gas a fortnight on Wednesday and act as a proxy voter, I will certainly raise the sort of questions about performance that are voiced not merely by consumers but that we have heard from the now empty Conservative Benches.
What has been the response of the British Gas board to the falling level of profits and of earnings per share—the indicators that show whether a company is in a healthy state? The chief executive, Cedric Brown, had a 75 per cent. pay rise last September and, on top of that, has been awarded 437,000 executive share options, worth more than £3 a share, and now stands to pick up a bonus of 125 per cent. of his salary, which is nearly £600,000—he is a millionaire in a year.
Other board members who are responsible for scrutinising the workings of British Gas and perhaps for drawing to the chairman's attention any lapse in the company's performance have been noticeably silent. Norman Blacker, who holds 165,000 share options worth £500,000, has been silent. Howard Dalton, who holds


236,000 share options worth £700,000, has been silent. Russell Herbett, who holds 163,000 share options worth about £500,000, has been silent. Philip Rogerson, who holds 237,000 share options worth about £700,000, is another silent voice in the boardroom. Finally, Roy Gardener, the finance director who joined the company last autumn, has been silent—a silence bought at a price of £1.1 million in share options and a salary of £285,000.
In addition, all those people stand to pick up bonuses: Mr. Blacker stands to pick up £984,000; Mr. Dalton, £355,000; Mr. Herbett, £210,000; Mr. Rogerson, £310,000; and Mr. Gardener, £355,000, on top of his £1.1 million in share options and his £285,000 salary. Those bonuses, payments and share options have all been earned on the back of the company's declining performance for its shareholders. However, I am more concerned about the company's performance and duties to the consumers whom it is supposed to serve.
British Gas has made drastic cuts. If we are to believe Mr. Giordano, British Gas is the only business that can make such cuts without an impact on services. The Minister was trapped in Committee, despite, I presume, a previous briefing by Mr. Giordano that those cuts were having no impact. Given that the number of British Gas showrooms has been axed from 426 to 266 and that showrooms have been closing in high streets throughout the country, depriving people of a service that they have enjoyed for many years, it is hardly surprising that consumer dissatisfaction is on the increase. Given that showroom staff levels will have fallen from 4,000 to 1,400 by the end of this year, it is hardly surprising that the public are not getting the personal service about which British Gas was reprimanded by the Minister responsible for the charter marks.
Home service advisers are the subject of a new clause, which we shall discuss today or tomorrow, so I shall not dwell on the matter. The number of home service advisers, who help elderly and disabled people in their homes and ensure that the arthritic and the blind receive practical assistance, cannot be cut from 136 to 78 without impacting on that service in every region that British Gas serves.
This year, the emergency services budget of £9 million to trace gas leaks was cut to £1 million. Spare parts have been removed from the vans of engineers conducting emergency call-outs so that they are left with no choice but to cut off defective appliances at the risk of some unscrupulous landlord or criminal proprietor reconnecting a faulty gas heater or cooker and putting at risk not just themselves and their families but their neighbours. Such a policy contrasts markedly with the lavish handouts in the boardrooms.
If British Gas is so proud of the remuneration package that it offers its key directors, and if it thinks that their performance is at the forefront of British business and an example to everyone, why has it hidden its share options schemes from its shareholders? Amendment No. 54 makes the holder of a licence under the Gas Act 1986 liable
to publish annually details of the remuneration of the executive and non-executive directors of that company, including any salaries, fees, benefits in kind and share options.
On Friday, I visited one of the biggest investors in British Gas, Standard Life, and this morning I called on the Prudential, the biggest single institution that invests in British Gas. They both confirmed their surprise—I

detected a shade of annoyance—at Mr. Giordano's decision to review in secret the remuneration of directors in January 1994. The fact that that was not mentioned in the annual report in February obviously came as a surprise to them, as it would to most shareholders. The fact that it was not mentioned when the quarterly returns were signed off slightly later that spring also came as a surprise. The remuneration packages were not mentioned at the annual general meeting in April, or even in September when the company signed off the second quarter's results. Nor was it mentioned when it was employing Mr. Gardener with £1.1 million of share options and a high salary.
It was not until the Financial Times published the information on 21 November 1994 that shareholders, even institutional shareholders, realised that they had been excluded from those critical decisions. We are talking not about a few employees who hold a few hundred thousand pounds' worth of shares but about those whom I met this morning, who hold more than £300 millions' worth of shares, and those to whom I talked on Friday, who hold some £290 millions' worth of shares. So it is no wonder that the matter is out of control, and a new clause and amendment are needed to ensure that such boardroom excesses are publicised.
All that cosy little arrangement was presided over by a key board member, Lord Peter Walker. He was the Secretary of State for Energy who left the Cabinet on 4 May 1990 and by June—within a month—had joined the board of British Gas. The "revolving door" did not apply to Peter Walker; for him, it was an open door to the boardroom of the very company that he voted to privatise. There was no "decent interval", as Nolan has now recommended, but just an indecent haste to join the fattest cats of them all. There are no checks on them, only cheques to them.
This may have been what the Prime Minister meant when, in response to a question in the House on 9 February, he spoke with unusual insight about peer pressure in the private sector. Perhaps he meant the peers who have left the Government and joined the boardrooms, such as the noble Lord Young, who joined Cable and Wireless having been Secretary of State for Trade and Industry responsible for privatising telecommunications, or Lord Tebbit, who was responsible for privatising British Aerospace and then joined its board. That shows the pressure of peers on the boardrooms—no restraint whatever—and why it is necessary to support the new clause.
We need regulatory pressure on British Gas, the six bosses of which have received nearly £7 million in share options, to ensure that its performance to consumers and shareholders is improved. We need similar regulatory pressure on the water and sewerage companies, the 42 bosses of which have awarded themselves £22 million in share options, and on the regional electricity companies, the 63 bosses of which have given themselves £46 million in share options.
The new clause is a model for exercising the minimum modest restraint on the directors of those utilities. It is no secret to the House that the Opposition have had their differences with the present regulators, but even those regulators should be allowed some discretion to ensure that, where boardroom salaries and share options hit jackpot and national lottery levels, the regulator can at


least take a step back and ask what service is being provided to consumers and whether it merits such high boardroom salaries.
It seems obvious that, even if share values rise or remain as high, we must question the soaring number of consumer complaints, which rose by 94 per cent. in the three months from November to January compared with the same period the previous year and by 19 per cent. compared with the previous three months.
All those figures would give any other private company pause for thought. If, for instance, Marks and Spencer or Littlewoods saw the number of consumer complaints soar, even if their share prices were rising into the stratosphere someone on the board would sit back and say, "Wait a minute, we shall lose all our customers if those consumer complaints continue." So the proposals make sound economic, shareholder and consumer sense.
It is important also to look outside this place and beyond the Labour party's opinion. The concerns that the shadow Chancellor, my hon. Friend the Member for Dunfermline, East (Mr. Brown), voiced at the weekend are now echoed in all the newspapers that strongly support the Conservatives. Today's Daily Mail talks about the profits made by David Jefferies, chairman of the National Grid, who—

Madam Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but I must caution him against going too wide of the subject. The clause deals with gas and, although a passing reference to other utilities is acceptable, I now detect a widening out, which is not acceptable.

Mr. Griffiths: Perhaps I will be in order if I quote a better example from The Sun, which, today, specifically mentions the gas, water and power bosses. That paper arguably influenced the election and caused the swing that led the Tories to hold on to power, just. Today's editorial, entitled "Greed, Inc." states:
Gas, water and power bosses who leach millions from their cash-gushing monopolies are little better than licensed thieves.
With nobody to stop them, they just keep returning to the scene of the crime and filling their pockets with extra loot.
They've made fortunes out of pay, perks and pensions.
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That sums up why the clause is needed. Today's edition of the Daily Express also ran an article with the headline "Time to curb fat cat bosses". It states:
The energy, ingenuity and urgency with which they have arranged to line their pockets would turn the strongest stomach.
That paper, which is not a Labour one, has seen the light. In a possible rebuke to the Minister, it states:
Any sixth-form economic student knows that monopolies can hardly help doing well, since they lack the competition that would otherwise squeeze profits and provide independent benchmarks of performance … the Government simply cannot afford to be passive.
That is exactly why I am urging the Government to support the new clause. That paper also states:
it certainly will not do for Ministers—like Industry and Energy Minister Tim Eggar—to dismiss the fuss as Labour posturing.
We are not posturing, because our complaint is firmly founded on the concerns of consumers as well as of shareholders.
It is important that a message goes from Parliament to the boardrooms of utilities, to reinforce the message sent by Nolan last week, to the effect that directors cannot continue to cash in their chips at an alarming rate to enrich themselves. Twelve directors of the privatised utilities have become millionaires. Those directors cannot afford to continue in that way and ignore the true needs of their shareholders, their companies and, specifically, the needs of 18 million gas consumers.

Mr. Hain: I support new clause 2, because, for successive months, the Government have been engulfed in sleaze involving not just the behaviour of successive Ministers, as well as of certain Back Benchers, but that of the privatised utilities. The Government have been engulfed by that sleaze because of their failure to get to grips with those privatised utilities and the way in which they are taking the country for a ride. After all, the gas bills that we pay enable the gas directors and others to enjoy the life of Riley. As has been exposed in the past year, our money has paid for the successive share options that they have given themselves and their massive salary increases, which have repeatedly rained upon us, month after month.
The new clause is a valuable vehicle because it opens the window on that aspect of Government sleaze. It is obscene that six British Gas directors have been able to award themselves £7 million of share options. They are among the top 50 directors of privatised utilities who have awarded themselves £40 million in share options. Across the board, 131 utility bosses have awarded themselves £100 million-worth of share options.
The new clause would curb that practice, which is particularly reprehensible because it is a form of insider dealing. Those directors are not agreeing to remuneration terms and salary levels that are openly declared and accountable to those attending the annual general meetings. They are stuffing share options in their own back pockets and, at the same time, determining, according to the priorities they set for their company, the value of those shares. They have effectively created a mechanism from which they benefit. That objective is quite different from the other possible business objectives of British Gas, or any other privatised utility. Those directors' performance should be judged by much more rigorous, sensible and acceptable business targets, such as the levels of investment and productivity reached. The extent to which those targets have been met might well lead to the payment of bonuses.
Investment is a critical target for any serious industry such as British Gas. Jacking up the share prices and benefiting from them through freebie share options is in direct conflict with investment, because the more share values are driven up, the higher the dividends that are paid to satisfy the insatiable thirst for higher returns on those shares, which, in turn, results from the short-termist economy that the Government have established. Those payments are made at the expense of the needs of British Gas.
The practice of British Gas directors represents a microcosm of what is wrong with the British economy. The Government have created a short-term, speculative, money-for-nothing economy. The behaviour of the British Gas directors exemplifies that. That small elite, in their privileged position, think that they can simply exploit that


economy for all they are worth. The share option manoeuvre is a particularly reprehensible example of such exploitation.
As my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) has said, it is not surprising that the share option manoeuvre is part of the wider picture of Cabinet Ministers leaving the Cabinet room for the boardroom. Lord Walker helped to privatise British Gas and he has now ended up on its board. I do not think that my constituents can understand the extent to which Members of Parliament are indifferent to the sleaze that now grips them.

Mr. Patrick McLoughlin: The hon. Gentleman has stressed how former Cabinet Ministers have joined the boards of particular companies. If there were a Labour Government at some time in the future, what would he think about sponsored trade union members acquiring ministerial responsibility for those industries by which they had been sponsored?

Mr. Hain: I do not think that the hon. Member has the power to invite me to take on a job.

Mr. McLoughlin: indicated dissent.

Mr. Hain: The hon. Gentleman is not being as charitable as I thought. Is he seriously trying to suggest that I as a sponsored Member—I represent Post Office interests—might be barred from taking up a post in the unlikely event of being offered such a responsibility? That is nothing like someone in Cabinet, responsible for a privatisation that handed millions of pounds in share options and other means to the board, being invited by that very board to serve on it. That is the old boys network in operation. Those people are systematically lining each others' pockets. That is quite different from the example that the hon. Gentleman quoted.

Madam Deputy Speaker: Order. I am not sure that it has anything to do with new clause 2 either. Perhaps the hon. Gentleman would return to the point.

Mr. Hain: I am pleased to do so, Madam Deputy Speaker. Your intervention was welcome—[Interruption.]—but not for the reasons about which right hon. and hon. Conservative Members are now happily smirking. I am happy to defend my argument, but the hon. Member for West Derbyshire (Mr. McLoughlin) introduced a red herring. Without disobeying your dictum, Madam Deputy Speaker, I should like to say that it was interesting to note the reports in the Sunday newspapers that a number of Ministers were considering pressing the Prime Minister to dismiss them early, so that they could take early retirement and get in before—

Madam Deputy Speaker: Order. I have exercised my judgment: the hon. Gentleman is quite out of order.

Mr. Hain: I accept your judgment, Madam Deputy Speaker, since I have absolutely no option. I was unreasonably provoked by the hon. Member for West Derbyshire and perhaps you will bear that in mind, in mitigation.
I return to my central argument. Many of my constituents cannot pay their gas bills because they cannot even obtain a supply of gas to their homes. The Minister may be weary of my quoting that example, but many people who live up valleys in my constituency—in the

Swansea valley, in villages such as Cwmllynfell and Rhiwfawr and, at the top of the Dulais valley, in Seven Sisters and Banwen—have campaigned for years for gas to be supplied up to their villages, and I have supported their campaign.
Gas has been supplied, in some cases, to places less than a mile away from those villages. British Gas has informed me that the total cost of supplying those villages with gas would be less than £3 million; yet six of its directors have received £7 million in share options—more than twice the cost of supplying gas to those villagers who desperately need it. It is a straight trade-off. My constituents do not understand, and I do not understand, how the Government can possibly defend a position whereby share options are dished out like confetti raining down at a wedding or on some similar occasion, when my constituents cannot obtain a gas supply that would cost half the sum that British Gas directors have awarded themselves in share options.
There is a straight trade-off between the creation of millionaires and the misery resulting. New clause 2 would give the Government the power to instruct the Director General of Gas Supply and ensure that that abuse—that type of insider dealing and lining of pockets by senior utility bosses, specifically of British Gas—should cease.
The gas industry is, yes, a privatised operation now; nevertheless it should, as a national champion, set high ethical standards that are respected by customers throughout the country and that will cause low-income customers especially to understand that they are in a fair society—not an unfair society rigged against them, in which millionaires continue to make money yet, if customers cannot pay their bills, their gas supply is cut off. That type of discrimination and exploitation should end. New clause 2 may give the Government a vehicle for ending it.

Mr. Clapham: New clause 2 and amendment No. 54 are enormously important.
New clause 2 seeks to impose price penalties on companies where there is excessive executive pay. My hon. Friends have given many examples to show how needful that is.
Clause 54 requires companies to publish details of executive remuneration as a standard of the licence condition. It seems perfectly fair that people should have access to information about remunerative packages paid to executives of utilities.
In some of the press reports about what is likely to happen in the nuclear industry, it has been suggested that a provision similar to new clause 2 would be part of any new legislation for privatisation of the nuclear industry. Perhaps the Minister will enlighten us as to whether that is correct.
New clause 2 gives the Secretary of State responsibility for directing the regulator as to the way in which executives' salaries should be taken into account when setting maximum charges for gas supply, transportation and shipping. That gives the Government indirect power to solve the problem of excessive executive pay packages—the most prominent example being, I suppose, the doubling of Cedric Brown's basic salary at the same time as British Gas showroom staff were asked to take pay cuts.
Subsection (1) of new clause 2, makes it plain that
The Secretary of State shall from time to time issue guidance to the Director as to the matters he is to take into account in exercising any powers specified in the conditions of a licence granted under section 7 or 7A of the 1986 Act to limit, vary or otherwise control the charges set by a licence holder for the supply, transportation or shipping of gas.
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The Minister will be aware, from the Select Committee on Trade and Industry report on the domestic gas market, that the evidence given to the Committee showed that the cost per therm of gas left little room for competition. The report showed that the cost of gas is likely to be about 21.5p—43 per cent. of the total cost per therm. Those were the figures given by British Gas. Transportation and storage was given as 22.5p—45 per cent. of the cost per therm. The supply and trading costs were given as 6p—12 per cent. of the cost per therm, which is reckoned at 50p. That leaves very little room for any changes to be brought about as a result of competition.
I think it is generally accepted that the cost of gas to all the companies likely to be involved in the domestic market will be very similar. Transportation and storage costs will also be very similar. That leaves only trading costs, in which there is likely to be a great deal of competition.
Therefore, not only is it important that consumers are given the opportunity to evaluate the performance of the companies, which may be reflected in some of the price changes that come about, but it is important that they have access to the information regarding the remuneration packages paid to the directors. That is all the more important when it is obvious that the focus of competition will be on that very small part of the cost of a therm of gas.
The powers set out in new clause 2 would allow the regulator to ensure that directors' pay not justified by performance was funded from shareholders' pockets rather than higher prices.
Relying on the future recommendations of the Greenbury committee—to which the Minister referred during discussion in Committee—is not on, because one might liken the Greenbury committee to putting the mice in charge of the cheese. The committee is made up of millionaires, many of whom draw large salaries from their business activities. If they are to make judgments about the remunerative packages to be paid in the utilities, many Labour Members will not expect the Greenbury committee to come up with dramatic or radical changes to the remunerative packages proposed for executives in the utilities.
The Government's response to new clause 2 will show the general public how serious they are about wishing to tackle the problem of directors who award themselves increases unjustified by performance. If the Government oppose the clause, they will demonstrate that the Prime Minister is unwilling or unable to give any substance to his claims of concern about excesses, and that the Tories remain the party of those who would turn a blind eye to the privatisation rip-off and corporate sleaze.
I would expect the Minister to take new clause 2 and amendment No. 54 on board. As well as being necessary for the regulator to control corporate access, amendment

No. 54 is justified on its own merits. Consumers should be able to discover easily how much the directors of public utilities are paid and to assess whether it is a fair amount. Opposition to the new clause is a vote to continue to prevent the utilities from being held accountable to the public.

Ms Coffey: The Government's response to the recent outrage over the profits that the chairmen of the public utilities have earned—or rather, not earned, for that is the problem—has been low level. The Government's response demonstrates how out of touch they are with what the ordinary member of the public feels about what is happening.
The public do not regard gas as a just another commodity, even though the Government have been trying hard to persuade them that it is. Gas is not seen as a commodity by the public, but as an essential service for which they have to pay out of their income. Over recent years, most of the public have suffered a cut in their income. They have to manage within a limited income. Their pay may have increased minimally, in line with inflation, but they still have to pay all their bills out of a limited income.
Gas is a service for which the public have to pay. The Government have gone to great pains to explain that the benefits of privatisation have included a decrease in the price of gas, but the decrease has affected some consumers and not others. It is not the price of the service that irritates the public beyond belief, but seeing something which belonged to them, and which was transferred to the private market for their benefit, being used by a few people to line their own pockets. That has caused public outrage.
The money that the directors and chairman have earned is beyond the wildest dreams of most working people in this country and seems out of all proportion to anything that people could reasonably earn by the job that they do. People have rightly asked what the chairman has done to earn so much money. The answer is not that the chairman has done anything to earn the money, but that he has got the money because he is the chairman and is able to award himself the money. The ordinary people of this country—particularly those who have been asked to make sacrifices and those who work in the public sector—do not like that system.
We can compare the earnings and the share options of the chairman of British Gas with what nurses are able to earn and what they have been asked to take in wage increases. The British public regard nurses as just as valuable as the chairman of British Gas. They see an enormous disparity between the two sets of earnings, which they believe to be inequitable and unfair. They cannot understand why the Government are unwilling to do something about that. The Government are not willing to criticise the system or to take action to ensure that the British sense of equity and fairness is not outraged.
The British people ask why, in a privatised industry, one person's contribution should be considered so valuable that he can earn an inordinate amount of money in an annual salary and become a millionaire through the exercise of share options, while other employees who contribute to that industry are rewarded with wage cuts and, in some cases, redundancy. The British people wonder why the chairman is worth so much and an


employee is worth so little in comparison. In an industry, everyone contributes and everyone's contribution is valuable and worth while.
The Government's argument has always been that huge salaries are paid and chairmen receive enormous amounts of money through exercising their share options because it is important that a private utility has the best possible chairman. The Government say that they are simply following the practice of the private market. The private market may adopt that practice, but there is a great deal more competition in the private market than in the public utilities.
British Gas is a monopoly, the regional electricity companies are monopolies and the water companies are monopolies. People think that perhaps it is not so hard to manage a monopoly when consumers have no option but to buy the service being sold. The analogy between British Gas and what is happening in the private market elsewhere does not hold up. The public utilities will always be a special case because they sell essential services and they will always have to be open to regulation to ensure that they do not rip off the public through price increases. That is why we have regulation. The public know that, and they bitterly resent what is happening.
The purpose of the new clause is to give to the regulator an opportunity to look at what is happening and to relate the remuneration of the chairman of British Gas and his executives to the company's performance. There must be some sort of performance-related pay. There must be some reason to award oneself hundreds of thousands of pounds in bonus, albeit through share options. The person involved has to have done something to earn the money—it is not just manna from heaven—and it is difficult to see what has been done for such sums to be earned in British Gas.
People might understand the bonus or level of salary if they could see what it had been paid for. A number of criteria for measuring the performance of British Gas could be drawn up. They could include its performance in terms of customer care, in terms of helping low-income customers and in terms of ensuring that services are accessible to the public, its investment record and its relationship with its employees.
As my hon. Friend the Member for Neath (Mr. Hain) said, in this country too much time is spent considering companies' and industries' performances simply in terms of their share prices and their dividend yield. Criteria which go beyond that should be applied in determining the quality of a company. British Gas, the regulator or the Minister could show the lead and apply such criteria to the public utilities to set an example to the rest of British industry. It could be shown that the criteria should involve not merely short-term success, but the long-term health of an industry.
I hope that the Minister will respond positively to the amendment. In previous debates on the subject, he has said that the Opposition have been motivated by the politics of envy and do not like people to earn too much money. We do not like people being awarded too much money when they have not earned it. The important word is "earning". In this country we believe that people should earn what they receive and we believe that everyone's contribution to an industry is important.
The Minister should recognise the public sense of outrage at what is happening. Most members of the public believe that there will be a continuing inequity, and that the gap in earnings between those who do a decent day's work and those who sit in the boardroom is becoming too big. Sitting in the boardroom and good management are important, but gas fitters and the people who do the job are also important. Those people must be justly rewarded. One man or group of people should not be rewarded far in excess of other people.

Mr. Eggar: I enjoyed the speech of the hon. Member for Stockport (Ms Coffey), not least because she suddenly had to correct herself a number of times during her prolonged peroration to say that the Labour party is sometimes in favour of management and sometimes in favour of high pay, as if the new Labour piece was getting into her brain and she was remembering the right words so as not to undermine her credibility with the current trend within the Labour party.
New clause 2 is extremely pernicious, for all the words uttered in particular by the hon. Member for Clackmannan (Mr. O'Neill) from the Front Bench. It would fundamentally undermine the basis of the regulatory system as the independence of the regulator is the cornerstone of the way in which regulation is approached, not just here but in virtually every country around the world.
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The reason for and the importance of the regulator's independence is that it removes political interference from the management of the regulated utility. New clause 2, more unashamedly than any previous amendment, seeks to reassert political control over the management of the gas industry.

Mr. Kevin Hughes: Hear, hear.

Mr. Eggar: "Hear, hear," says the unreconstructed hon. Member for Doncaster, North (Mr. Hughes).
Despite all the honeyed words of the Leader of the Opposition and occasionally other Labour Front Bench spokesmen about their dedication to make industry more effective and their commitment to competition, what they really feel in their hearts is that they want political control over the management not just of the gas industry but all parts of British industry. They have not really put their hearts into a new clause IV, it is all just part of an elaborate con.

Mr. Nigel Griffiths: We want to know what new Conservatives are thinking and whether new Conservatives are the same as old Conservatives, backing those with their snouts in the trough, the corporate greed and the absolute abuses that have even brought The Sun, the Daily Mail and the Daily Express on to Labour's side on this issue.

Mr. Eggar: That was a pretty feeble attempt by the hon. Gentleman. At least some of the more honourable Labour Members admitted that the Labour party wants to reassert political control of the gas industry. I am delighted to see that the hon. Member for Neath (Mr. Hain) is smiling, as that is straight down his view of where the Labour party should be.
The Opposition want to go further than reasserting political control. In the terms of the new clause, they want to do it directly by reintroducing an incomes policy through the back door. That is what lies behind new clause 2.
Neither today nor at any stage in Committee have the Opposition introduced a shred of evidence to suggest that there is any logical reason to relate price caps on the one hand to board pay on the other. The reason for that is quite clear. First, even if one takes the total remuneration package for the whole of the British Gas board, which came to some £2.3 million last year—

Mr. Kevin Hughes: Per month?

Mr. Eggar: No, per year. That represents a cost of about 1p per month on each gas consumer's bill.
In addition, we heard some absolutely absurd figures from the hon. Member for Edinburgh, South (Mr. Griffiths). If he follows the precedent of the level of research to which he has risen in the debate when he attends the British Gas annual general meeting, as he has promised to do, he really will be made a mockery. He fails to understand that the vast bulk of the share options to which he referred were offered at only 9p per share below today's price on the stock exchange. The vast sums that he mentioned bear no relation to the potential or actual profit that could be exercised today.

Mr. Nigel Griffiths: The Minister needs a lesson in accuracy as well as economics. The exercised price was 221p and the latest market price is just over £3—302p or 304p—so the difference is more than 9p.

Mr. Eggar: The hon. Gentleman is following his long established tradition in misusing the Short money made available to the Opposition. The vast bulk of those share options were offered at 293.5p and today's price is 302.5p. The difference in broad sums is 9p per share. That is the reality. The hon. Gentleman should at least be honest with the House and accept that those were the terms on which the vast bulk of those share options were made available to current board members.

Mr. Hain: The Minister pooh-poohs the impact on ordinary customers of these bloated share options for British Gas directors and says that it is matter of a few pence on bills. No doubt the arithmetic proves his point. How does he explain to my constituents—who were told that British Gas cannot afford to extend supply to the Dulais valley and the Swansea valley as it will cost about £3 million—that six directors are being offered £7 million in share options? That is not a few pence, and it is a straight comparison. How does he explain the justification for that?

Mr. Eggar: I must congratulate the hon. Gentleman on his persistence on that particular issue. I assume that the voracity of his local papers is absolutely unlimited, as it is the third or fourth time that he has raised the issue. First, I do not accept his figure in regard to the share options. I suspect that he has failed to take account of the price at which the shares were offered, but that is a minor point.
We have already discussed in Committee the particular problem that his constituents and, to be fair, the constituents of many hon. Members may have with regard to getting on

to the gas grid system. I explained in detail how the provisions of the Bill will make it possible for public gas transporters other than British Gas to access the national grid and to provide a gas grid system into areas previously been isolated from the grid. I also made it clear that the change in the ability to pay effectively by instalments for the capital works associated with the gas grid should also provide vendors of the services—the public gas transporters—and consumers with possibilities which did not previously exist.
As the hon. Gentleman well knows, I cannot say that, as a result of the Bill, those communities will get on to the gas grid system, but there will be opportunities available which did not previously exist. That should at least be some reassurance to him and to his constituents. In fairness to the hon. Gentleman, he has most persistently opposed the Bill. He has always made it clear that he does not support it. I am not quite sure how he squares his opposition to the Bill with the advocacy of the interests of his constituents, when he has at least admitted that the Bill will make it easier for public gas transporters to bring gas to the fairly isolated communities that he represents. Perhaps he and his local paper should reflect on the level of inconsistency in his position with regard to the Bill as a whole.

Madam Deputy Speaker: Order. I remind the Minister that we are not dealing with the whole Bill; we are dealing with one clause and one amendment.

Mr. Eggar: I fear that I have been led down a path that I should not have followed.

Mr. Hain: Enticed.

Mr. Eggar: I was enticed—to use the hon. Gentleman's word—by the nature of the intervention. I am grateful to you for setting me straight, Madam Deputy Speaker.
In discussing the board level salaries in British Gas and other entities, an important factor is persistently overlooked. British Gas is regulated according to an RPI minus X formula—in other words, the price at which it sells is the important factor. If the industry's costs rise above the level anticipated or above those of its competitors, the impact will be felt by the shareholders and not by the customers who have the advantage of the RPI minus X formula. The idea that somehow high salaries are awarded to board members at a cost to the customer simply does not stand up against any scrutiny of the way in which the regulatory system works.
When the level of the RPI minus X formula is reviewed, the regulator in this industry, as in others, must take account of whether she regards the level of cost in that organisation—including the total remuneration of the board—as appropriate when setting X. That normally occurs on a five-year basis, although it may be earlier in the case of gas.

Mr. Nigel Griffiths: When my colleagues and I met the regulator, she spelled out very clearly that she did not even look at salaries in the boardroom. However, the Minister has implied that she examines that cost in arriving at an RPI minus formula.

Mr. Eggar: It is one of the factors that the regulator may wish to take into account when setting the formula. She may choose not to do so; it depends on the way in which she approaches the issue. If new clause 2 were to be supported, it is absolutely clear that there would be political direction


of the regulator and political interference in the working of the gas industry and that, in effect, an incomes policy would operate through the back door. The hon. Member for Edinburgh, South shrugs his shoulders; it seems extraordinary that the Labour party, which the shadow Chancellor claims is in favour of competition, should take that line. That cannot be the correct way to proceed.

Kevin Hughes: The Minister has referred to an incomes policy. It seems to me that the fat cats already have an incomes policy: grab as much as they can for themselves. Does the Minister seriously think that in excess of £400,000 is a fair salary to receive for three days' work? It is interesting that the first time that Tory Back Benchers spoke in Committee was to defend their mates, the fat cats, and their fat salaries.

Mr. Eggar: The decisions that are taken as to the level of salaries are a matter for the board and the remuneration committees. At the end of the day, the shareholders have the ultimate say about salary levels. They can exercise whatever powers they choose. As the hon. Gentleman knows, the Government have made it clear that we will consider the recommendations of the Greenbury committee. If the committee recommends legislation in this area, we shall not hesitate to legislate if we consider that appropriate. We do not rule out legislation in this area.
New clause 2 is fundamentally flawed. It involves the introduction of an incomes policy by the back door and political direction of the gas industry and it completely contradicts the broad thrust of Opposition policy as advanced by the shadow Chancellor.

Mr. O'Neill: It would appear that it becomes a political direction for the regulator when the House decides that the salaries and the conditions of directors should be taken into account, yet it is not a political direction if the regulator is required to take account of environmental factors or social responsibilities in relation to the elderly. Those issues are not considered political, but directors' pay is. Somehow the whole regulatory function is transformed because the pay and conditions of a small group of full-time employees—with the exception of the chairman of the company—must be examined by the regulator when determining price levels.
We know that in most instances salaries can be justified to a certain extent. They cannot be justified publicly because the remuneration committee does not meet in public. As I understand it, when the salary of the present chairman of British Gas was increased above the company's limit for directors' salaries, that decision was not transmitted to the annual general meeting in the year that it was made. As a result of such a lack of transparency, shareholders are unable to establish the basis on which decisions are taken. They may be able to ask questions at the AGM, but they are not told of the rationale behind the decision in the company papers or in the final accounts.
There is no means of ensuring that shareholders are clear about why certain individuals are receiving such pay awards. The awards may be based on some kind of notional performance, but, if so, one would imagine that the stratospheric levels that have been breached by the pay rises that certain individuals have enjoyed of late would somehow be related to the company's performance. In

some instances that has been true, but when producing her figures the regulator is not obliged to separate the regulated areas of business from the unregulated areas. Therefore, she is at a certain disadvantage.
There appears to be a link between profit, performance and pay. We know—no one disputes this fact—that the cost of directors' salaries amounts to about 12p per annum per household. It is not significant in terms of profits; we will not reduce prices significantly by cutting directors' salaries to zero. However, the public are concerned about a company that operates in almost monopoly conditions being able to afford to pay its directors salaries that are beyond the expectations and understanding of most ordinary citizens. What we find offensive is the manner in which pay awards are made and reported to the company's shareholders and the fact that the regulator is powerless to take account of them in calculating whether price rises are acceptable. An element of responsibility must be given to the regulator.
Major investors and people representing pension funds and the like repeatedly tell us, as they told my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) just last week, that they are concerned. We must often explain to them that, when in office, the Labour party will have to recognise the protection of the consumer and of the company, its long-term future and the significance of ensuring a steady stream of investment into the company, so that its activities can be funded by means other than purely increasing its bills. We recognise that those three objectives must be balanced and that, to a certain extent at least, responsibility for doing so rests with the regulator and with the regulatory system.
There is a lack of confidence among consumers. As publicity of the pay rises and share options given to senior British Gas executives has increased, people have said, "If they are getting such big rises and doing such a good job, how come I am not getting the service that I think I am entitled to for the whopping bills I am having to pay?" That is why, in the space of three months, the number of complaints increased by 93 per cent. and why the Cabinet has threatened British Gas with withdrawal of its charter mark.
We find, however, that the regulator can do nothing. She cannot question the manner in which the company is being run. We want her to be given the opportunity to take note of such matters. She should be required to take pay into account, not least because of the effect of a significant pay rise on the running of a firm.
If the public feel that executives are not ensuring a good service and are being paid far too much, someone must be able to blow the whistle. We know that not all investors, and not all those who will attend the AGM with their proxy votes, will be that concerned. Many of them have a vested interest in sustaining the remuneration system that affords directors of British Gas and of the companies that they represent the pay that they receive. This is about not the politics of envy but the politics of greed and the ability of a small coterie of interlocking directorships to scratch each other's backs and to ensure that they all get a bit of the action out of companies for which they have some responsibility.
It is difficult for major shareholders to get on to the board and to have an influence. Attempts were made by unions such as the National Union of Mineworkers to influence the investment policies of certain companies in South Africa. They were told that they could not do so


because commercial judgments were the responsibility of investors. It was proven that sustaining investment in South Africa over the years was not the correct investment decision. The decision of investors ultimately to withdraw from South Africa was a major contributory factor in the ending of apartheid.
I am not drawing analogies between the rate of pay for directors in the former utilities and the working of apartheid, but the same supine attitude that was adopted by people who attended board meetings of major investors in South Africa prevails today at general meetings of some of the utilities. The legitimate concerns of small shareholders and of pension fund contributors and the like are being ignored. One of the most satisfactory and easy ways to take those into account is to give responsibility to the regulator to consider remuneration when she considers price and its relationship to profit.

Ms Coffey: Does my hon. Friend agree that there appears to be some confusion in the Minister's argument? He said that giving such a responsibility would give some political control to the regulator and that, therefore, he is not prepared to have anything to do with it, but then said that if the Greenbury committee makes recommendations the Government might legislate. In legislating, they would be prepared to take political control. Is it just that the Minister is washing his hands of the problem because it is too difficult?

Mr. O'Neill: We shall just have to wait for the Greenbury committee's recommendations. Many of us doubt that it will produce very much. The Prime Minister said:
we are waiting for recommendations on that, and, when necessary, when the facts are available, we shall decide what action needs to be taken, if necessary, including legislation."—[Official Report, 2 March 1995; Vol. 255, c. 1182.]
We all know the genesis of the Greenbury committee. It was proposed by the Confederation of British Industry. Its members include those who have benefited from the working of the system. We will all be surprised if it will be able to be sufficiently objective to make recommendations that will satisfy everyone in the House, or at least that will require the Prime Minister to introduce legislation. Most of us believe that it is a fairly cynical exercise.
We want the Government to take this opportunity. We want the regulatory system to be revised. We have been operating under a series of regulators for about 11 or 12 years. This is the first opportunity to examine legislation on a former nationalised utility and, in the light of experience under private ownership, the effectiveness of the regulatory system. That is why we repeatedly returned in Committee to the question of how the regulatory system operates.
We have clearly identified a major shortcoming in the regulatory system: the regulator does not have to take account of the rewards that companies pay their staff when determining prices. The new clause and the amendment would allow the regulator to take account of that, in the same way as she must take account of other issues that are deemed, in most people's eyes, to be political: the environment, the level of gas supplies and the needs of the disabled and elderly, which we recognise. If those are not political issues, heavens above, I do not know what are.
Members of the public in wheelchairs chained themselves to the gates of the House of Commons because disabled people's rights were not being properly recognised in the House. That is a matter of such controversy by dint of it being political. It is nonsense for the Minister to say that, somehow, the regulator will be drawn into politics if the new clause is accepted. If it is passed, the regulator will be drawn into the real world.
For too long, the major energy regulators in the electricity and gas industries have regarded their areas of responsibility as some sort of free market adventure playground where they can work out their fantasies about perfect competition. That was the kind of thing in which, in the past, only academic economists were able to indulge on the blackboards or whiteboards in their lecture rooms. They were given large, expensive toys with which to play but they did not want to break those toys. They regarded them as being made of porcelain and felt that they should not touch then. Because the system has not been properly considered, it is working against the very people for whom the regulator is supposed to be responsible first and foremost—consumers and shareholders.

6 pm

Mr. Clapham: I mentioned a reference in the press to legislation on the privatisation of the nuclear industry containing a clause similar to new clause 2. The Minister did not refute that similarity. Would my hon. Friend like to develop that point?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. I hope that the hon. Gentleman will not develop that point. This debate concerns the gas industry, not the nuclear industry.

Mr. O'Neill: I will not stray, Mr. Deputy Speaker. Suffice to say that, when an industry is privatised, it is difficult to legislate beyond the point of privatisation. A free-standing, independent company is established, whose articles of association are determined not by the privatisation measure but by company law and the regulatory process. The regulatory process under which British Gas operates does not take account of the pay and conditions enjoyed by its directors. The amendment would correct that shortcoming by changing the regulatory regime.

Mr. Hain: Does my hon. Friend agree that the regulatory system is being brought into disrepute and that many customers and citizens feel that it is not protecting them because of massive abuses caused by boardroom excess, with directors awarding themselves share options and so on? People think, "This is not for me." The regulator is supposed to protect the consumer but she is turning a blind eye to greed on a massive scale.

Mr. O'Neill: I could not agree more, and I go further. That is a problem for not only consumers but small shareholders who, having invested perhaps most of their life savings, are asking themselves, "Have I put my money in the right company? Am I doing the right thing in associating with that company?"
In previous debates on the gas industry, we pointed out that British Gas was once regarded second only to Marks and Spencer as the most popular company in the country. That position prevailed until publicity about the pay and


conditions now enjoyed by its directors. There has been a transformation in public esteem for British Gas. Its activities once attracted respect worldwide. When in public ownership, it carried through the changeover to North sea gas, which was one of the biggest civil engineering exercises this country and western Europe have ever seen. British Gas played on that affection, and its directors thought that they could ride to the bank with suitcases full of money from their various remunerative perks. The only way in which such an anomaly can be corrected is if the regulator can cast her eye over the situation.

Mr. Robert Ainsworth: My hon. Friend rightly spoke about the direct consequences of excessive executive salaries, but they have a small impact on the price paid by the consumer. Are there not other consequences, such as the effect on pay in the organisation, and the demoralising effect on efficiency, when employees see the people at the top treating themselves in the way that British Gas directors do? The indirect effects on the consumer can also be substantial.

Mr. O'Neill: I could not agree more. The argument used to be made that it was not a bad idea to pay the bosses good wages, so that everybody else would be dragged along behind them and that would reflect on the morale of the whole operation. Another company in the energy business, Scottish Nuclear, gave all its staff exactly the same pay rise for the specific purpose of improving morale. British Gas did the opposite.
Gas showrooms were not simply high-street supermarkets but places to which consumers looked both to purchase gas appliances and to obtain advice and information on a range of equipment. If one went to a shopping mall, visited a retail outlet offering a variety of white and brown goods and asked about the energy efficiency of a particular product, it was not unusual to be directed to the gas showroom because only there was the relevant knowledge and information available. That was because gas showroom staff were trained and properly remunerated. I do not mean to speak disparagingly of other shop assistants, but British Gas showroom staff regarded themselves as people who did more than walk off the street and start work in a shop the next day. British Gas provided morale and a sense of worth that have been lost as a consequence of the changing character of its showrooms.
Of equal importance is the obscene way in which British Gas staff pay has been cut while the pay of bosses has mushroomed and gone through the roof. We are considering not just the interests of consumers and shareholders. It is in the long-term interests of the success of British Gas that the regulator has power over those people who appear completely unanswerable to anyone. I mentioned the structure of British Gas AGMs and the votes held by people who participate in them. We in the Labour movement might identify them as being not dissimilar to the old block votes. The big companies scratch each other's backs and protect one another.
The new clause is the best approach that we can suggest at this time. It may have imperfections but the Minister did not mention any. He said that the new clause was somehow political. A number of responsibilities already imposed on the regulator are clearly political, and the new clause is political because it attacks vested interests. It is about not the politics of envy but the politics of greed.
I urge my hon. Friends to vote for the amendment, which can change the character of regulation in this country, restore public faith in the regulatory system and

give the regulator guidance in performing her duties—guidance that she does not seem to have at present and appears unwilling to seek. We will press this amendment to a vote, and I urge all hon. Members who believe in fair remuneration and fair reward for people working in the gas industry to accept that the new clause would achieve that, while ensuring that small shareholders in particular will be given adequate protection.

Question put, That the clause be read a Second time:—

The House divided: Ayes 234, Noes 271.

Division No. 146]
[6.10 pm


AYES


Abbott, Ms Diane
Davies, Ron (Caerphilly)


Ainsworth, Robert (Cov'try NE)
Denham, John


Allen, Graham
Dewar, Donald


Alton, David
Dixon, Don


Anderson, Donald (Swansea E)
Dobson, Frank


Anderson, Ms Janet (Ros'dale)
Donohoe, Brian H


Armstrong, Hilary
Dowd, Jim


Ashdown, Rt Hon Paddy
Dunnachie, Jimmy


Ashton, Joe
Dunwoody, Mrs Gwyneth


Austin-Walker, John
Eagle, Ms Angela


Banks, Tony (Newham NW)
Eastham, Ken


Barnes, Harry
Enright, Derek


Barron, Kevin
Etherington, Bill


Battle, John
Evans, John (St Helens N)


Beckett, Rt Hon Margaret
Fatchett, Derek


Berth, Rt Hon A J
Field, Frank (Birkenhead)


Bell, Stuart
Fisher, Mark


Benn, Rt Hon Tony
Flynn, Paul


Bennett, Andrew F
Foster, Rt Hon Derek


Bermingham, Gerald
Foster, Don (Bath)


Berry, Roger
Foulkes, George


Betts, Clive
Fraser, John


Blair, Rt Hon Tony
Fyfe, Maria


Blunkett, David
Galbraith, Sam


Boateng, Paul
Galloway, George


Bradley, Keith
Gapes, Mike


Bray, Dr Jeremy
Garrett, John


Brown, Gordon (Dunfermline E)
Gerrard, Neil


Brown, N (N'c'tle upon Tyne E)
Godman, Dr Norman A


Burden, Richard
Godsiff, Roger


Byers, Stephen
Golding, Mrs Llin


Caborn, Richard
Gordon, Mildred


Callaghan, Jim
Graham, Thomas


Campbell, Mrs Anne (C'bridge)
Grant, Bernie (Tottenham)


Campbell, Menzies (Fife NE)
Griffiths, Nigel (Edinburgh S)


Cann, Jamie
Griffiths, Win (Bridgend)


Chisholm, Malcolm
Grocott, Bruce


Church, Judith
Gunnell, John


Clapham, Michael
Hain, Peter


Clark, Dr David (South Shields)
Hall, Mike


Clarke, Eric (Midlothian)
Harman, Ms Harriet


Clarke, Tom (Monklands W)
Harvey, Nick


Clelland, David
Henderson, Doug


Clwyd, Mrs Ann
Heppell, John


Coffey, Ann
Hill, Keith (Streatham)


Connarty, Michael
Hinchliffe, David


Cook, Frank (Stockton N)
Hodge, Margaret


Cook, Robin (Livingston)
Hoey, Kate


Corbett, Robin
Hogg, Norman (Cumbernauld)


Corbyn, Jeremy
Hood, Jimmy


Cousins, Jim
Hoon, Geoffrey


Cummings, John
Howarth, George (Knowsley North)


Cunliffe, Lawrence
Howells, Dr. Kim (Pontypridd)


Cunningham, Jim (Covy SE)
Hoyle, Doug


Cunningham, Rt Hon Dr John
Hughes, Kevin (Doncaster N)


Dafis, Cynog
Hughes, Robert (Aberdeen N)


Dalyell, Tarn
Hughes, Roy (Newport E)


Davidson, Ian
Hutton, John


Davies, Bryan (Oldham C'tral)
Illsley, Eric


Davies, Rt Hon Denzil (Llanelli)
Ingram, Adam






Jackson, Glenda (H'stead)
Pendry, Tom


Jackson, Helen (Shefld, H)
Pike, Peter L


Jamieson, David
Pope, Greg


Janner, Greville
Powell, Ray (Ogmore)


Jones, Barry (Alyn and D'side)
Prentice, Bridget (Lew'm E)


Jones, Jon Owen (Cardiff'C)
Prentice, Gordon (Pendle)


Jones, Lynne (B'ham S O)
Primarolo, Dawn


Jones, Martyn (Clwyd, SW)
Purchase, Ken


Jowell, Tessa Quin,
Ms Joyce


Kaufman, Rt Hon Gerald
Randall, Stuart


Kennedy, Charles (Ross,C&S)
Raynsford, Nick


Kennedy, Jane (Lpool Brdgn)
Reid, Dr John


Khabra, Piara
S Rendel,David


Kilfoyle, Peter
Robertson, George (Hamilton)


Lestor, Joan (Eccles)
Roche, Mrs Barbara


Lewis, Terry
Rogers, Allan


Litherland, Robert
Rooker, Jeff


Livingstone, Ken
Rooney, Terry


Lloyd, Tony (Stretford)
Ross, Ernie (Dundee W)


Lynne, Ms Liz
Rowlands, Ted


McAvoy, Thomas
Ruddock, Joan


McCartney, Ian
Sedgemore, Brian


McCrea, The Reverend William
Sheerman, Barry


Macdonald, Calum
Sheldon, Rt Hon Robert


McFall, John
Shore, Rt Hon Peter


Mackinlay, Andrew
Short, Clare


McLeish, Henry
Simpson, Alan


McMaster, Gordon
Skinner, Dennis


McNamara, Kevin
Smith, Chris (Isl'ton S & F'sbury)


MacShane, Denis
Smith, Llew (Blaenau Gwent)


Madden, Max
Soley, Clive


Maddcck, Diana
Spearing, Nigel


Mahon, Alice
Squire, Rachel (Dunfermline W)


Marek, Dr John
Steinberg, Gerry


Martlew, Eric
Stevenson, George


Meacher, Michael
Sutcliffe, Gerry


Meale, Alan
Taylor, Mrs Ann (Dewsbury)


Michael, Alun
Taylor, Matthew (Truro)


Michie, Bill (Sheffield Heeley)
Timms, Stephen


Milbum, Alan
Tipping, Paddy


Miller, Andrew
Touhig, Don


Moonie, Dr Lewis
Turner, Dennis


Morgan, Rhodri
Vaz, Keith


Morley, Elliot
Walker, Rt Hon Sir Harold


Morris, Rt Hon Alfred (Wy'nshawe)
Walley, Joan


Morris, Estelle (B'ham Yardley)
Wareing, Robert N


Mowlam, Marjorie
Watson, Mike


Mudie, George
Williams, Rt Hon Alan (SW'n W)


Mullin, Chris
Williams, Alan W (Carmarthen)


Murphy, Paul
Winnick, David


Oakes, Rt Hon Gordon
Wise, Audrey


O'Brien, Mike (N W'kshire)
Worthington, Tony


O'Brien, William (Normanton)
Wray, Jimmy


O'Hara, Edward
Wright, Dr Tony


Olner, Bill
Young, David (Bolton SE)


O'Neill, Martin



Orme, Rt Hon Stanley
Tellers for the Ayes:


Patchett, Terry
Mr. Joe Benton and


Pearson, Ian
Mr. Peter Mandelson




NOES


Ainsworth, Peter (East Surrey)
Banks, Matthew (Southport)


Aitken, Rt Hon Jonathan
Banks, Robert (Harrogate)


Alison, Rt Hon Michael (Selby)
Batiste, Spencer


Allason, Rupert (Torbay)
Bendall, Vivian


Amess, David
Beresford, Sir Paul


Arbuthnot, James
Biffen, Rt Hon John


Arnold, Jacques (Gravesham)
Booth, Hartley


Arnold, Sir Thomas (Hazel Grv)
Boswell, Tim


Ashby, David
Bottomley, Peter (Eltham)


Atkins, Robert
Bottomley, Rt Hon Virginia


Atkinson, David (Bour'mouth E)
Bowis, John


Atkinson, Peter (Hexham)
Boyson, Rt Hon Sir Rhodes


Baker, Rt Hon Kenneth (Mole V)
Brandreth, Gyles


Baker, Nicholas (North Dorset)
Brazier, Julian


Baldry, Tony
Bright, Sir Graham





Brooke, Rt Hon Peter
Hargreaves, Andrew


Brown, M (Brigg & Cl'thorpes)
Harris, David


Browning, Mrs Angela
Haselhurst, Alan


Budgen, Nicholas
Hawkins, Nick


Burl, Alistair
Hayes, Jerry


Butcher, John
Heald, Oliver


Butler, Peter
Heath, Rt Hon Sir Edward


Butterfill, John
Heathcoat-Amory, David


Carlisle, Sir Kenneth (Lincoln)
Hendry, Charles


Carrington, Matthew
Hicks, Robert


Cash, William
Hill, James (Southampton Test)


Channon, Rt Hon Paul
Hogg, Rt Hon Douglas (G'tham)


Chapman, Sydney
Horam, John


Clappison, James
Hordern, Rt Hon Sir Peter


Clark, Dr Michael (Rochford)
Howard, Rt Hon Michael


Clifton-Brown, Geoffrey
Howarth, Alan (Strat'rd-on-A)


Coe, Sebastian Howell,
Rt Hon David (G'dford)


Conway, Derek Howell,
Sir Ralph (N Norfolk)


Coombs, Anthony (Wyre For'st)
Hughes, Robert G (Harrow W)


Coombs, Simon (Swindon)
Hunt, Sir John (Ravensbourne)


Cope, Rt Hon Sir John
Hunter, Andrew


Cormack, Sir Patrick
Hurd, Rt Hon Douglas


Couchman, James
Jack, Michael


Cran, James
Jackson, Robert (Wantage)


Currie, Mrs Edwina (S D'by'ire)
Jenkin, Bernard


Curry, David (Skipton & Ripon)
Jessel, Toby


Davies, Quentin (Stamford)
Johnson Smith, Sir Geoffrey


Day, Stephen
Jones, Gwilym (Cardiff N)


Deva, Nirj Joseph
Jones, Robert B (W Hertfdshr)


Dorrell, Rt Hon Stephen
Jopling, Rt Hon Michael


Douglas-Hamilton, Lord James
Kellett-Bowman, Dame Elaine


Dover, Den
King, Rt Hon Tom


Duncan, Alan
Kirkhope, Timothy


Duncan-Smith, lain
Knapman, Roger


Dunn, Bob
Knight, Mrs Angela (Erewash)


Durant, Sir Anthony
Knight, Greg (Derby N)


Dykes, Hugh Knight,
Dame Jill (Bir'm E'st'n)


Eggar, Rt Hon Tim
Kynoch, George (Kincardine)


Elletson, Harold
Lait, Mrs Jacqui


Emery, Rt Hon Sir Peter
Lang, Rt Hon Ian


Evans, David (Welwyn Hatfield)
Lawrence, Sir Ivan


Evans, Jonathan (Brecon)
Legg, Barry


Evans, Nigel (Ribble Valley)
Leigh, Edward


Evans, Roger (Monmouth)
Lennox-Boyd, Sir Mark


Evennett, David
Lester, Jim (Broxtowe)


Faber, David
Lidington, David


Fabricant, Michael
Lightbown, David


Fenner, Dame Peggy
Lilley, Rt Hon Peter


Field, Barry (Isle of Wight)
Lloyd, Rt Hon Sir Peter (Fareham)


Fishburn, Dudley
Lord, Micheal


Forman, Nigel
Lyell, Rt Hon Sir Nicholas


Forsyth, Rt Hon Michael (Stirling)
MacGregor, Rat Hon John


Forth, Eric
MacKay, Andrew


Fox, Dr Liam (Woodspring)
Maclean David


Fox, Sir Marcus (Shipley)
McLoughlin, Patrick


Freeman, Rt Hon Roger
McMaster, Gordon


French, Douglas
Madel, Sir David


Gale, Roger
Maitland, Lady Olga


Gardiner, Sir George
Malone, Gerald


Garel-Jones, Rt Hon Tristan
Mans, Keith


Garnier, Edward
Marlow, Tony


Gill, Christopher
Marshall, John (Hendon S)


Gillan, Cheryl
Marshall, Sir Michael (Arundel)


Goodlad, Rt Hon Alastair
Martin, David (Portsmouth S)


Goodson-Wickes, Dr Charles
Mawhinney, Rt Hon Dr Brian


Gorst, Sir John
Mellor, Rt Hon David


Grant, Sir A (SW Cambs)
Merchant, Piers


Greenway, Harry (Ealing N)
Mills, Iain


Greenway, John (Ryedale)
Mitchell, Andrew (Gedling)


Griffiths, Peter (Portsmouth, N)
Mitchell, Sir Daviid (NW Hants)


Grylls, Sir Michael
Moate, Sir Roger


Gummer, Rt Hon John Selwyn
Monro, Sir Hector


Hague, William
Montgomery, Sir Fergus


Hampson, Dr Keith
Moss, Malcolm


Hanley, Rt Hon Jeremy
Needham, Rt Hon Richard


Hannam, Sir John
Nelson, Anthony






Neubert, Sir Michael
Steen, Anthony


Newton, Rt Hon Tony
Stephen, Michael


Nicholls, Patrick
Stern, Michael


Nicholson, David (Taunton)
Stewart, Allan


Nicholson, Emma (Devon West)
Streeter, Gary


Norris, Steve
Sumberg, David


Onslow, Rt Hon Sir Cranley
Sykes, John


Oppenheim, Phillip
Tapsell, Sir Peter


Ottaway, Richard
Taylor, Ian (Esher)


Patnick, Sir Irvine
Taylor, John M (Solihull)


Pattie, Rt Hon Sir Geoffrey
Taylor, Sir Teddy (Southend, E)


Pawsey, James
Temple-Morris, Peter


Peacock, Mrs Elizabeth
Thomason, Roy


Porter, Barry (Wirral S)
Thompson, Sir Donald (C'er V)


Porter, David (Waveney)
Thompson, Patrick (Norwich N)


Portillo, Rt Hon Michael
Thornton, Sir Malcolm


Powell, William (Corby)
Thumham, Peter


Redwood, Rt Hon John
Townend, John (Bridlington)


Renton, Rt Hon Tim
Townsend, Cyril D (Bexl'yh'th)


Riddick, Graham
Tracey, Richard


Robathan, Andrew
Trend, Michael


Robinson, Mark (Somerton)
Twinn, Dr Ian


Roe, Mrs Marion (Broxbourne)
Vaughan, Sir Gerard


Rowe, Andrew (Mid Kent)
Waldegrave, Rt Hon William


Rumbold, Rt Hon Dame Angela
Walden, George


Ryder, Rt Hon Richard
Walker, Bill (N Tayside)


Sackville, Tom
Waller, Gary


Sainsbury, Rt Hon Sir Timothy
Ward, John


Scott, Rt Hon Sir Nicholas
Wardle, Charles (Bexhill)


Shaw, David (Dover)
Waterson, Nigel


Shephard, Rt Hon Gillian
Watts, John


Shepherd, Colin (Hereford)
Wells, Bowen


Shepherd, Richard (Aldridge)
Whitney, Ray


Shersby, Michael
Whittingdale, John


Sims, Roge
Widdecombe, Ann


Skeet, Sir Trevor
Wilkinson, John


Smith, Tim (Beaconsfield)
Willetts, David


Soames, Nicholas
Wilshire, David


Speed, Sir Keith
Winterton, Nicholas (Macc'fld)


Spencer, Sir Derek
Wolfson, Mark


Spicer, Michael (S Worcs)
Yeo, Tim


Spink, Dr Robert
Young, Rt Hon Sir George


Spring, Richard



Sproat, Iain
Tellers for the Noes:


Squire, Robin (Hornchurch)
Mr. Michael Bates and


Stanley, Rt Hon Sir John
Mr. Simon Burns.

Question accordingly negatived.

New clause 3

DUTY OF GAS CONSUMERS' COUNCIL TO MONITOR EFFECTS ON CONSUMERS OF PROVISIONS OF THE GAS ACT 1995

'After Section 41 of the 1986 Act there shall be inserted the following section—
(41A). The Council shall be under a duty to monitor and report in accordance with section 41 above on the effects of the provisions of the Gas Act 1995 on the interests of gas consumers, with particular regard to prices charged and other terms of supply, the continuity of supply, the quality of the gas supply services provided, the exercise of rights of entry to premises and the extent of universal access to gas conveyed through pipes.".'.—[Mr. O'Neill.]

Brought up, and read the First time.

Mr. O'Neill: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following: New clause 8—Duty of Director to prevent discrimination by gas suppliers against certain classes of consumers—

'The Director shall be under a duty to ensure that a licensed gas supplier shall not introduce price tariffs or payment arrangements which unreasonably discriminate against consumers by virtue of the location of their home or the manner or place at which they settle their accounts.'.

New clause 9—Duty of gas supplier to publish terms of supply—

'(1) A gas supplier licensed under section 7A of the 1986 Act (hereafter referred to as the supplier) shall publish the prices to be charged to consumers for the supply of gas and the associated services he will provide (hereafter referred to as "terms of supply") in such a manner as, after consultation with the Director and the Council, he considers will achieve publicity for his terms of supply among all domestic gas consumers in his licence area.

(2) The supplier shall, in the publishing of his terms of supply, not show undue preference to any person or class of person and shall not exercise any undue discrimination against any person or class of persons.

(3) The supplier shall, on being required to do so by any potential domestic gas consumer in his area, give and continue to give a supply of gas at premises of which that potential customer is an owner, occupier or leaseholder and which is connected by a service pipe to a relevant main.

(4) The supplier shall be required to provide the Director with any information relevant to his duties under section [Duty of Director to protect interests of consumers]

(5) In this section, "terms of supply" may be taken to include standards of service and such other services which the supplier is obliged to provide in accordance with standard licence conditions.'.

New clause 10—Duty of Director to protect interests of consumer—

(1) The Director shall have a duty to protect the interests of consumers of gas conveyed through pipes in respect of the prices charged and of other terms of supply as defined in subsection (1) and (5) of section [Duty of gas supplier to publish terms of supply], the continuity of supply and the exercise of rights under this part to enter their premises.

(2) The Director shall have a duty to secure effective choice for all classes of consumer.

(3) In performing his duties under subsections (1) and (2) above the Director shall not grant a licence or an extension or restriction under section 7A of the 1986 Act if he is of the opinion that the description or area has been so framed as—

(a) in the case of the licence or extension to exclude from the licence or extension; or
(b) in the case of a restriction, artificially to include in the restriction,
an undue proportion of consumers who are disabled or of pensionable age or who are in receipt of a state benefit or to whom he might reasonably expect to supply less than 700 therms per annum.

(4) In performing his duties under subsection (3) above the Director shall have power to require the relevant licence applicant or holder and any body or person likely to be representative of those affected to provide him with information with regard to the customer mix of the licence applicant or holder.

(5) If it appears to the Director that a supplier licensed under section 7A of the 1986 Act has contravened any provision of this section, the Director may impose upon the licence holder a requirement to pay to him a monetary penalty of such amount as may be appropriate, in all the circumstances of the case, in respect of the contravention in question.'.

Amendment No. 44, in clause 1, page 1, line 29, after 'supply', insert
'including the establishment of effective contingency plans to deal with serious breakdowns in supply.'.

Amendment No. 48, in clause 6, page 8, leave out lines 3 to 14.

Amendment No. 50, in clause 8, page 12, line 11, after 'modifications', insert


'including those persons or bodies appearing to the Director to be representative of consumers.'.

Mr. O'Neill: This group of amendments, starting with new clause 3, seeks to impose a duty on the Gas Consumers Council which gives it responsibility for monitoring prices. When the legislation was being considered, it was assumed that the GCC would not survive the publication of the Bill. It was anticipated that the council's responsibilities would be overtaken by those of the regulator, that the council was merely a relic of the old days of public ownership and that there would be no reason for its continued existence.
There was a some surprise and relief that the GCC survived in its present form. We have yet to see what impact the cuts in the council's budget will have, but the Opposition have confidence in the council, which seeks to represent consumers on gas matters, as it has perhaps more of an arm's-length relationship with the Government than Ofgas appears to have at present. It is no secret, and it is almost inevitable, that when legislation of this character is being drafted, the regulator works closely with the Department to secure a form of words that it considers appropriate for the licensing function that it has to carry out.
We would like the Gas Consumers Council to have clear and explicit responsibilities which, in the first instance, should cover prices. An independent dispassionate body should examine the pricing system and the implications of the regulator's recommendations because, at the end of the day, the regulator is responsible for setting prices. The Government have already said this evening that they wish to interfere with—if that is the correct expression—or pass judgment on the regulator in as few ways as possible. However, we believe that there should be a body which, with status and responsibility, can command widespread respect for its role and functions. We would have thought that the Gas Consumers Council was such a body. Therefore, the purpose of new clause 3 is to impose upon the GCC a number of responsibilities. The first relates to price, while the second deals with the terms of supply and the manner in which the supply would be arranged.
It is clear that the regulator has a number of duties to fulfil, and the determination of the terms of the licence is one of the most important. It is therefore vital that the terms of supply should be considered. The terms can cover a variety of arrangements for supply.
Continuity of supply must be considered. One of the considerations that has been uppermost in the minds of those who have taken an interest in the Bill has been that the individuals seeking licences should have sufficient funds to conduct their business. That means not only that they have sufficient funds to pay their staff and to take account of safety obligations where appropriate, but that they are able to purchase the gas that is to be piped through the system to households. Continuity of supply must be subject to independent non-regulatory monitoring. We would want to ensure that the GCC has the resources and the remit to do that.
6.30 pm
We also want to look at the quality of supply services. We have discussed the problems that British Gas has encountered. A number of instances in which British Gas

has been deficient in its services have gained great publicity, but aspects of the running of British Gas, such as remuneration, have focused attention on the organisation. Individuals have now realised that there are people to whom they can direct their complaints. The Government have threatened to withdraw the charter mark from British Gas, and it sees that as a worry because it was with great pride that British Gas accepted that honour. We are not saying that a company such as British Gas cannot bounce back and produce a service that is the envy of the world.
We must look at the potential of some of the newcomers that wish to enter the business. It is clear that there are a number of them operating in public utilities already. It has been suggested that regional electricity companies will come into the frame as new licensees, and a number of them have entered into contracts with gas suppliers. The new companies will doubtless bring to the supply of gas the same high standards that they maintained when they were publicly owned electricity utilities.
Many of us have had opportunities to talk to local electricity companies, and they have expressed willingness to aspire to the standards that they have reached in other fields. Some companies are limited in experience and in their scale of operation, and such companies must be policed and monitored. It is our view that the Gas Consumers Council could do that, and it could inform the regulator and the Secretary of State of any deficiencies in the system. The GCC does that at the moment, but we would like to see that duty enshrined in legislation.
I now come to one of the most sensitive areas in the supply and provision of gas—the right to enter premises. A certain number of individuals who work for the public utilities attract a great deal of affection in the eyes of the public. It is fair to say that a generation brought up on Postman Pat is less likely to question the continued public ownership of the Post Office than people who envisage a committee man or woman in a uniform delivering mail for some tinpot organisation. A degree of trust is extended to postmen. I should perhaps say postpeople, as nowadays there are as many postwomen as postmen. In America, they are called letter carriers, which seems to be a compromise that predates this age of political correctness.
Some British Gas staff have access to people's homes, and they normally wear some form of uniform and have easily legible and intelligible forms of identification. In many instances, due notice has been given that the person would be coming to check the meter or to deal with the other problems related to gas maintenance. There are occasions when there might be an emergency, when no notice can be given before the visit, and there might be cases in which individuals use faked identification.
There ought to be an independent body, which would be able to monitor the exercise of the right of entry to premises. That is in no way an implied criticism of the staff of British Gas. We have all experienced their courtesy when they come to read meters. I realise that you, Mr. Deputy Speaker, may well use coal-fired heating in your house, but I must say that the service that gas users receive is courteous, thoughtful and considerate.
A number of people operating in the gas industry do not necessarily aspire to the high standards laid down by British Gas. One of the recurrent themes in Committee was the inadequacy of some of those who were operating


under the overall umbrella of the Council of Registered Gas Installers scheme. Individuals assumed for themselves rights of entry which, under the law, they would probably have been allowed to exercise, but which were not exercised with proper care and attention in a number of instances.
In a deregulated gas market, we would wish a wider range of individuals to be given the opportunity to have the right of entry into premises and people's homes. As a consequence, we should be able to secure some means whereby the public can have the confidence that, should anything go wrong, they will be able to contact the GCC to register their concerns.
As I have said, the Gas Consumers Council has carried out several of those duties in the past. In recent months, it has been extremely active in lobbying the House on several concerns that it perceives relate to consumers' rights. It has been most active in respect of universal access to gas. It has certainly been extremely concerned that one problem of the deregulated gas business is that there will be a lack of enthusiasm on the part of some suppliers to acquire customers who might be problematic—that is, people who live in awkward locations or people whom British Gas has decided are not necessarily cost-effective consumers. We want to ensure that there is someone to whom the rejected potential gas consumer can turn. It would be quite reasonable for the GCC to have the monitoring responsibility and to enshrine it in legislation.
New clause 9 is the public service clause. It is the duty of the gas supplier to publish the terms of supply. The terms of supply relate to the publication of prices. It should be clear that it is in everyone's interests that prices are published in the press and in the areas where gas companies are operating. Prices should be publicised nationally, so that individuals can compare and contrast supply across the country.
We also want to see in the public service clause a duty on the gas supplier not to show undue preference or discriminate against any individuals or groups. We recognise that there is what is known as discriminatory practice. By changing or arranging the terms of purchase or the terms of contract and the like, suppliers can deny certain individuals access to goods or services that should be available.
There is also a requirement to supply those who are at present connected to the main. It should not be the right of a gas supplier to say, "We will take that household but not that household." If someone is connected to the gas supply, he should be entitled to obtain gas from any supplier that has a licence to operate in the area. There have been occasions when such entitlements have been undermined. Bodies such as citizens advice bureaux have investigated such cases. Indeed, many have been brought to our attention as constituency Members.
Recently, the CAB in south Wales reported that British Gas refused to connect the gas supply for a client who was a single parent with three young children, including an eight-week-old baby. They had just moved into rented accommodation, and there was an existing gas supply there, but they were refused because the previous occupant had tampered with the meter. Because of such instances, it is important that a specific body has a duty to gather information and the resources to advertise.

Perhaps gas bills could state that consumers could go to the Gas Consumers Council if they felt that the public service clause was not being adhered to.
We want to ensure not only that the Gas Consumers Council would be involved but that the gas supplier published the terms of supply and gave to Ofgas its information on consumer protection. That consumer protection facility would then be the subject of comparison between one company and another. In its annual reports, Ofgas would be able to draw conclusions as to the quality of services that were being provided. Indeed, the standard of service would always be an important consideration.
6.45 pm
New clause 3 places a duty on the Gas Consumers Council, and new clause 9 places a duty on the gas supplier. We would also like to see enshrined in the legislation a duty on the director general to protect the consumer. We want the Director General of Gas Supply to have a duty in respect of price and a duty to secure effective choice for all classes of customers. The director general would have to take account of the size and nature of an area to which licences applied—for example, to take into account the disabled, pensioners, people on state benefits or people who used fewer than 700 therms per annum. There would be a profile of each area, which would take account of that. It is essential to enshrine that in the legislation.
It is stated in the licences that such duties should be imposed. We would like to think that they will be enshrined in the primary legislation and that proper account will be taken of disadvantaged individuals such as the disabled, pensioners, people in receipt of state benefit and small consumers. Those people are the least attractive and the most expensive for suppliers to serve, and the director general should have an obligation to support and protect them.
We would also like to think that the director general would have a responsibility to ensure that those standards were upheld and that there would be punishment if they were not met. Companies could incur a financial penalty if the standards were not met over a period.
The regulator has several duties, but the protection of the consumer, the prevention of cherry-picking and the public service obligations should be clearly included in the primary legislation. It is for those reasons that we want the new clause.
Conservative Members have been very quick to protect small shopkeepers. Indeed, their numbers seemed to melt away as soon as the shopkeeper protection issue disappeared. However, the issues I have mentioned are at the very heart of the legislation. For example, there is the argument that, through competition, there will be an opportunity not only for lower prices but for better services. To those who back the Bill in its entirety, I stress that it is our view that such claims can be met only if we have a tough, effective and well-resourced Gas Consumers Council that has a clear duty to monitor the affairs of the companies involved, if there is a public service clause that imposes a duty on the gas supplier and if the overall director has a responsibility to ensure that those functions are carried out. The companies must be given proper incentives, in the form of the threat of financial punishment, to meet their obligations.
We hope that the new clause is of a character that will enjoy the support of all parties.

Ms Coffey: New clause 3 is important because it would help to protect the rights of consumers. It has been said that no one knows what will happen to particular groups of consumers in a fully competitive gas market, which means that proper monitoring is essential. I am especially interested in consumers who have pre-payment meters and who already pay a higher tariff for their gas than those who pay on budget schemes, by direct debit or by cash at a post office or their local gas showroom, if they are lucky.
It is clear from the Gas Consumers Council's statistics that there has been a huge increase in the number of pre-payment meters installed. There has been no problem with that, because having a pre-payment meter is clearly better than having one's gas supply cut off. By December 1994, 192,525 new token meters had been installed. Across the country there were 896,950 consumers with pre-payment meters, and the number of disconnections has decreased.
At present, people with pre-payment meters are paying a higher tariff for their gas. British Gas has not made it clear whether what they pay reflects the cost of supply. In the past, British Gas said that the cost had been cross-subsidised. The question was raised whether, once a competitive gas market was in full swing, those consumers could expect their gas tariff to rise in line with what it cost to supply them. That is worrying, because it might mean that they will not benefit from competition in the way that other consumers will. A gas company could offer to supply them at a higher tariff, because the cost of supply was higher, than it would charge people who wished to pay by direct debit.
The problem is that people with pre-payment meters are low-income customers: often, they are families on benefit or low wages and with young children; they might live on housing estates, have other debts and struggle to make ends meet. The situation merits careful monitoring because there will be pressure on people to accept pre-payment meters from the gas companies. Indeed, condition 10 of the licence says that a licensee can request
a deposit by way of security for the payment of charges as a condition of making a supply of gas available to the customer".
The company itself will set the level of that deposit.
The Minister is no doubt aware, however, that it is almost impossible for people on income support to pay a deposit. The Department of Social Security will have to pay it for them and then deduct it from their weekly benefit. If they already have deductions made from their benefits—for example, social fund payments—it will be impossible to pay a gas deposit. If they cannot pay such a deposit, the gas company will agree to supply gas, but through a pre-payment meter. The low-income family will therefore have to pay a higher tariff for their gas on a week-by-week basis.
It is not fair that people who have little money should pay more. The problem is that they have too little money to pay a deposit and take advantage of being a direct debit customer or one who pays every three months at a post office. Careful monitoring is essential, because I do not believe that this group of customers will benefit from competition.
I think that gas competitors will fix the tariff for pre-payment customers at the level already charged by British Gas, so there will be no benefit in moving from British Gas to new gas suppliers. At the same time, competitors will offer lower tariffs to better-off customers as the cost of supplying them will be less; they know that they will not have the same problems as British Gas in supplying low-income customers or those in urban areas. There will be little incentive for new gas suppliers to offer lower terms than British Gas on pre-payment meters.
Once the gas market has opened up, I have little doubt that some people will benefit. People like me and the Minister and those who have a bank account will benefit enormously, but I doubt that the same is true of the 896,950 customers with pre-payment meters. Their number will increase as more find that they cannot afford a deposit. That is why it is so important that the duty to monitor set out in the new clause is included in the Bill. It is unfair that poorer people will not benefit from competition relating to an essential service. I think that in two or three years it will be shown—the figures must be produced—that that is the case.
I have no doubt that it will be said that the Government must fulfil their social responsibility by making provision through social security legislation to compensate for the fact that some people have not benefited from the competitive gas market. Any Government who are asked to do that will want to know what has happened and why. The Bill will not remove from the Government—any Government—the responsibility to ensure that people on low incomes or on benefit or young families have essential services such as gas at a price that they can afford.

7 pm

Ms Hilary Armstrong: I support new clause 8. The terms of the gas and electricity privatisations made it exceptionally difficult for some people who live in rural areas to gain access to basic utilities. I had hoped that the Government would have recognised the case that has been put in the years since privatisation by Members of Parliament and the rural communities' councils for studying that issue. The new clause provides the Government with the opportunity to recognise the problems that were inherent in the means of privatisation and that have made it difficult for remote villages to gain access to utilities such as gas.
In my constituency, three or four villages and some smaller hamlets, mainly in the north Pennines, still have no gas; indeed, those hamlets have neither gas nor electricity. As we approach the millennium, surely that is something that we ought not to tolerate. Some of my constituents simply do not have access to things that we take for granted.
The Bill deals purely with gas and I have met British Gas officials on numerous occasions since being elected and on two or three occasions in the past year to discuss the problem. The village of Whitton-le-Wear does not have gas, but its neighbouring village, Howden-le-Wear, had it put in two years ago—I lit the initial flame. Whitton-le-Wear is only a mile away, but it happens to be over a hill and much smaller.
Gas was accessible to residents of Howden-le-Wear for less than £50 per household, but the price was to be about £2,000 per household for residents of Whitton-le-Wear.


British Gas felt that supplying the village was so out of order that it did not even circulate the proposals to every resident, as it knew that there would be uproar and people would be offended to find out that, if they had lived a mile down the road, they would have had access to gas for about £50. British Gas has, in effect, said that it believes that that village will never have gas.
The way in which British Gas was initially privatised means that it is impossible to offset such costs or to bring together villages to offer the service at an affordable price across them all. As that has not been possible, they do not have access to gas and in future the rules will be even more difficult.

Mr. Eggar: indicated dissent.

Ms Armstrong: The Minister denies that, but that is what British Gas officials feel. The supplement that they were able to offer will disappear under the Bill and the rules will become even more difficult, so it is even less likely that such villages will get gas.
Burnhope is another village in my constituency that is without gas, although the next village, which is less than a mile away, has had it for some time. There is a post-war housing estate in Burnhope where the council and the local housing association have been refurbishing houses under a special Government scheme. The council and the housing association agreed to put gas into the houses being refurbished. The cost to anyone whose house was not being refurbished, or who did not live on the council estate, was to be about £1,600.
Burnhope is one of the poorest villages in the county of Durham. I have given the House the figures before. The county now has the lowest incomes in the country, apart from an area of South Glamorgan, but incomes in Burnhope are lower than the average in Durham. If residents wanted gas but did not come under the scheme, they would have had to pay £1,500, so of course the scheme has not gone ahead in the rest of the village.
The irony is that, once gas has been in a street for five years, other people in the street can have access to it without paying that initial cost. People on such streets in Burnhope, who have purchased their houses, will be able to have access to gas in five years' time. The company has not extended the gas supply to the rest of the village, so any extension to other streets would be inordinately expensive. That is unjust, unfair and inequitable.
At a time when we are looking to the more efficient and effective use of gas and electricity, the House should be able to support that case and to say confidently that anyone, anywhere in this country will have a fair deal and be treated equally over access to utility services—in this case, gas.

Mr. Hain: I must follow on from the excellent contribution of my hon. Friend the Member for Durham, North-West (Ms Armstrong), who drew the attention of the House to the Bill's consequences and its failure to protect outlying and often poor villages, such as the villages in her constituency—former mining villages, I imagine, which exist in my constituency also.
New clause 8 specifies:
The Director shall be under a duty to ensure that a licensed gas supplier shall not introduce price tariffs or payment arrangements which unreasonably discriminate against consumers by virtue of the location of their home",

and so forth. Under new clause 10(2),
The Director shall have a duty to secure effective choice for all classes of consumer.
The great benefit of nationalisation and of the gas structure that was built up over generations was that every consumer had the right to access to gas at the same price. Universal access and uniform price were important principles, but they are both being undermined by the Bill and have been successively undermined by privatisation.
The Minister will be relieved to hear that I will not again detain the House by quoting cases of villages up the valleys in my constituency which have been denied access to gas in the way described by my hon. Friend the Member for Durham, North-West, as I have been over that ground quite a few times.
The Bill will institutionalise cherry-picking and social dumping, the other side of it, not by some accident but as the inevitable result of competition. Why? In this context, which is that of a vital utility service—I am talking not about competition in the ordinary exchange of consumer goods and so forth in the marketplace but about a vital service, which is what gas is to many millions of people—the competition focuses on the area in which suppliers and shippers can make money. Competitors are not going to waste their energies trying to invade markets that are not lucrative. They have a duty to their shareholders and they have to concentrate on where they can make money. Those are the areas in which prices will fall, and that will be at the expense of less lucrative markets, which will be socially dumped and where prices will rise.
For example, British Gas is already telling customers who pay by direct debit that they will pay 5 per cent. less, which will penalise and discriminate against customers who cannot pay by direct debit. Their prices will be 5 per cent. more in real terms. That is significant because, although the proportion of households with a bank or building society account has risen steadily, 19 per cent.—nearly a fifth—of households still have no current account through which they regularly handle their money. Some 40 per cent. of that group are pensioners and a further 40 per cent. are low-income householders with an income of less than £150 a week. It is those people who will be socially dumped.
Those statistics show that a significant proportion of the population will lose out. The regime has already discriminated against those people by denying them direct debit arrangements. A feature of that group is that it tends to be geographically concentrated. That criticism goes to the heart of the Bill, which does not afford protection to groups of householders in low-income areas such as exist in my constituency and those of many of my hon. Friends. Low-income households will be totally ignored by the competitors, which will not want to know about competition moving into such low-income areas. That has already happened in the case of direct debit arrangements, on which British Gas penalises up to a fifth of potential or actual gas consumers.
Another interesting geographical impact is that in Wales, for example, the proportion of gas customers with direct debit arrangements is half the number in the rest of the United Kingdom. Just 15 per cent. of gas customers in Wales pay by direct debit, compared with 28 per cent. in the United Kingdom as a whole because Wales has a much higher proportion of low-income households. It has the lowest gross domestic product per capita in the United Kingdom and, as a result, the cherry-picking and social


dumping that will result from the Bill will significantly discriminate against gas customers in Wales. The direct debit arrangements have provided a dress rehearsal for that.
This issue should be set against a much wider background. For example, citizens advice bureaux have already said that low-income users of gas are required to put down higher deposits or rely on pre-payment systems. As my hon. Friend the Member for Stockport (Ms Coffey) pointed out, those are more expensive than ordinary payment arrangements. They tend to be confined exclusively to low-income households and result in the phenomenon of "voluntary disconnection", as it is euphemistically described.
British Gas—and, once the Bill is enacted, the new suppliers—no longer breaks down people's doors to disconnect their supply. Instead, low-income householders will disconnect themselves through the pre-payment arrangement, thereby hiding a great deal of hardship. That phenomenon will increase because, under this regulatory system, increased competition is designed to lead to cost-related pricing, so those who cannot meet the terms of the competitive regime—in this case, low-income households—will be socially dumped.
The Government have disputed British Gas's assertion that 6 million would gain from cost-related pricing and 10 million would lose. I need only rely on the Monopolies and Mergers Commission report on the gas industry, which found:
Supply to low-volume users (whose use of gas may be confined to cookers and water heaters and who probably include a high proportion of elderly and poor customers) is currently unprofitable, and may require significant price rises.
The MMC also said:
We recognise that, while the introduction of competition may well result in a fall in the overall level of prices, some groups may be worse off than at present".
We thus have corroborative evidence from the MMC that cherry-picking will take place and social dumping will be the consequence.
Large users, many of whom are affluent families in large homes, will gain because they are cheaper to serve than the average householder. Some 4 million small users—often, poor households—are more expensive to serve, so their prices could rise significantly. The side effect is that, as many low-income users are on income support, the cost may be passed on to the state.
7.15 pm
Against that background, it is important to bear it in mind that the family expenditure survey showed that the poorest 20 per cent. in Britain spend 10 per cent. of their weekly budget on gas and electricity bills, whereas the richest 20 per cent. spend just 3 per cent. That is before the imposition of VAT on fuel and heating, which will make the position worse. Low-income families, who spend much more of their income on gas, will be hit even harder as a result of the competitive regime.
We should take note of evidence given by the citizens advice bureaux. For example, a CAB in Yorkshire reported that a client on income support with two dependent children, who had been paying £15 a week off arrears of £565 through the fuel direct scheme, came off income support having found a part-time job and could

no longer pay through the scheme. Although the family income was roughly the same as when the family was on income support once work-related expenses were taken into account, British Gas demanded a lump sum of £320 before coming to an arrangement to pay off arrears. That is a good example of how competition increasingly bears down on our most vulnerable citizens. Without the protection offered by the new clause, there is no guarantee that the phenomenon will not get worse.
It is essential that every gas customer has universal choice, and that is protected under the legislation. I am concerned about the failure to protect ordinary customers, and I refer to one aspect of the licensing arrangements. Although the director general is required to secure effective competition, she has no corresponding duty to secure universal choice. That duty should be statutorily imposed on the regulator, as the new clause seeks to do, otherwise suppliers will have greater freedom to select the more profitable customers and neglect the least profitable customers.
Standard licensing conditions 13 and 7(3) of the draft suppliers' licence could be dubbed a "cherry-pickers charter". Condition 13, which covers undue preference and undue discrimination, applies only to the dominant supplier. In this case, that is British Gas, and it will probably remain so for some time. The condition does not appear to prevent suppliers from supplying only the consumers they want to supply.
For example, condition 7(3) could allow a supplier to refuse to supply a less attractive consumer if he "claims" that to do so would jeopardise his existing customer base, which he may have attained through highly selective marketing techniques. Although there is a duty on every householder to request supply from any supplying company, there is no duty on those companies to canvass for support and to offer genuine choice to every householder. The failure to provide a statutory right to universal choice is a severe handicap, which will increase cherry-picking. That practice will be institutionalised by the regime that will be created as a result of it.
My suspicions were also aroused when the Minister failed to respond to an amendment tabled in Committee by my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) to extend the protection offered in proposed section 7B(4)(b) to the disabled and those of pensionable age to low-paid and low-income users. It would be easy to identify such low-income users, because they are likely to be in receipt of income support or family credit. I do not want to go into the detail of the proposed section, but it illustrates my argument about cherry-picking and social dumping. Why has protection been offered to disabled people and pensioners and not to low-income users? The answer is: one may be disabled but still be relatively affluent; one may be a pensioner but still be relatively affluent. There are rich pensioners.
Clause 7 could have easily offered similar support to low-income families and householders. That is why the new clauses are even more necessary; they require the regulator to pay particular attention to the needs of low-income householders and to ensure that they do not suffer discrimination through social dumping, while the cherry-picking of lucrative customers goes on as a result of competition.
I strongly believe that the thrust of the regulatory system needs radical reform. It needs to be rejigged to protect low-income users and to give them equal access


to gas supplies, to protect the principle of universality and to ensure that those do not suffer from discriminatory pricing regimes. We must have a regulatory system that is geared to the benefit of the common good, not a selected few.

Mr. Michael Clapham: Enough has been said about new clause 8, so I should like to refer in particular to new clauses 3, 9 and 10 and to amendment No. 44. Without the new clauses and amendments, it is clear the consumer will be unprotected. The Government should focus on ensuring that consumers are protected in the deregulated industry, so the Minister should accept new clauses 8 and 3 in particular.
As my hon. Friend the Member for Stockport (Ms Coffey) has said, no one knows where competition in gas will take us. There is a danger that the Bill, unless it is amended, may create competition that focuses on supplying the most attractive customers, who tend to be those who consume a great deal of gas and pay by direct debit. Those people may well gain an advantage unless the new clauses, which ensure that all consumers benefit from the proposed changes, are accepted.
The Minister may recall that in Committee I mentioned that I had had negotiations in my constituency, which is a rural one, with the cable companies and British Gas to see whether gas pipes could be laid at the same-time as cables. Apparently, that is not possible in certain areas of my constituency, but it may be possible in other constituencies. Has the Minister explored that possibility? Is he prepared to get cable companies with franchises together with British Gas to explore that possibility so that the gas supply can be connected to other villages? Perhaps the Minister can tell us today whether he has explored that idea.
New clause 3 is designed to give the Gas Consumers Council a duty to monitor the impact of deregulated gas supply. Without that scrutiny, it will be difficult for the council to do its job of protecting consumers' interests. I hope that the Minister is prepared to accept the new clause. Should he feel that its current terms are not quite suitable, perhaps he would be prepared to introduce his own new clause. It is important that the Gas Consumers Council is given that duty.
New clause 9 would ensure that all gas prices and associated services, for example, the terms for supply, are published. It would ensure that all customers have the right to a supply from any supplier and those suppliers do not unduly discriminate against any group of customers. The new clause is vital if we are to prevent cherry-picking. It also imposes a duty on suppliers to specify their standards of service as well as the price of their supply. Customers need that information if they are to make an informed choice between suppliers. I am sure that the Minister would agree that if we are to make this Bill work, customers will need to have information about the costs and prices of varying suppliers. It is important that such information, particularly about prices, is published.
As my hon. Friends have already said, low-income customers with pre-payment meters, who consume large amounts of gas, pay far more for their gas than other customers. Some customers with arrears have requested pre-payment meters in the belief that that will save them money. They must be told that such meters tend to cost

the consumer more. Without the publication, in a standard form, of all the varying prices, including the price per therm and the standing charge, customers will be unable to make the informed choice that is necessary for the market to function effectively. I am sure that the Minister agrees, so he will obviously accept the new clauses.

Mr. Eggar: What makes me smile is how well the hon. Gentleman has learnt the language since leaving the National Union of Mineworkers. The idea that the hon. Gentleman should argue for the market to operate effectively is amusing to say the least.

Mr. Clapham: The Minister is aware that I am a pragmatist. Although I would like the supply of gas to remain the responsibility of British Gas, I am prepared to accept that there is little the Opposition can do to prevent the Government from enacting the Bill. I am therefore trying to do my best to help my constituents to get betterment from the Bill.
New clause 10 aims to outlaw price discrimination against elderly people, disabled people, people who depend on state benefits and small consumers, and to create a duty on the regulator to give all customers an effective choice of supplier. It is important that all customers are given the opportunity to choose their supplier. Without legal protection, as set out in the new clauses, those groups of vulnerable people may end up paying more for their gas to fund price cuts for wealthy people. We must avoid that at all costs.
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As it stands, the Bill, as has been said by my hon. Friend the Member for Neath (Mr. Hain), is a cherry-pickers charter, as it places an obligation to supply customers without discrimination on British Gas only. As the Minister will be aware from some of the submissions that we received from other gas companies, many of those gas companies were content that the obligation that British Gas already accepts should be placed on them. It is important that we ensure that those standards are maintained.
New clause 10 also provides the regulator with the power to refuse to grant or extend a licence or to fine an existing licence holder if the supplier evades supplying those less attractive customers. The National Association of Citizens Advice Bureaux believes that, without those safeguards, competition in gas supply will fail to benefit all customers.
As my hon. Friend the Member for Neath said, when British Gas gave evidence to the Monopolies and Mergers Commission it said that there might be as many as 12 million losers. I know that, since that time, it has amended its assessment, and its assessment of losers is nowhere near the first figure that it gave the MMC. However, other independent organisations have carried out studies, which suggest that there might be as many as 4 million losers. The people who will lose are those who are the most vulnerable—people on low incomes, people on benefits and so on.
It is important, therefore, that those new clauses are accepted, or, if they are not accepted in their entirety, that the Minister is prepared to have his constitutional draftsmen reword the clauses so that the protection that those clauses seek to provide is incorporated in the Bill.
Those amendments are important, not only to gas consumers, but to utility customers, as they set out a framework against which the utilities may be judged. Only if the utilities are credible and seen to be credible, will the market be made to work.

Mr. Eggar: This is a large group of amendments, covering a disparate number of issues. I shall start by replying to some of the arguments that Opposition Members have made.
First, it has been a theme of the Opposition that the Bill is a cherry-pickers charter. Ultimately, the evidence will emerge of the way in which prices feed through for different groups of consumers. In fairness to the hon. Member for Stockport (Ms Coffey), she recognised that. The entire structure of the Bill is designed to ensure that there is no benefit to supplying companies in targeting consumers who are either of high or low volume in terms of the domestic spread. That has been done largely by the Director General of Gas Supply choosing the relatively low figure of the standing charge of about £15.
The best evidence we have of what happens in a competitive gas market is the evidence of the opening up of the industrial market in excess of 25,000 therms. When we started on the exercise of opening up the market from 25,000 therms upwards, as long ago as 1988, there was much criticism. It was said that some industrial companies would gain far more than others and that the average industrial customer would lose, as against the central pricing mechanism previously put in place by British Gas.
What has actually happened in the industrial market is that, in real terms, there has been a 35 per cent. reduction for the average industrial consumer. I have not heard of a single industrial consumer that has not benefited significantly from the introduction of competition in that market. I am the first to accept that it is not directly replicable in terms of the domestic market, but it is the best available evidence that we have.
The hon. Member for Stockport mentioned the issue of pre-payment meters. She quoted very precisely the number of customers on pre-payment meters at present—a figure of well in excess of 850,000 customers.
From my constituency experience, I know that quite a few consumers opt for a pre-payment meter, although they know that it will cost them slightly more, because they want the reliability of what I would call day by day, week by week budgeting instead of not knowing what the bill will be at the end of the quarter. However, we have that large number of pre-payment customers, the pre-payment meters are there, and I fail to understand why competitor companies should not be as keen to supply in a competitive way—and therefore reduce prices to—those 850,000 customers as they would other groups. They are a known credit risk because they use pre-payment meters.
As technology develops, competitor gas companies may be able to reduce the cost of the administrative side of pre-payment meters, and the gap may therefore close between costs to pre-payment customers and to what are called traditional payment customers.
Further, of course, there are adequate provisions in the standard conditions to ensure that each supplier offers several payment methods and cannot discriminate unduly between people who use those.

Ms Coffey: The Minister must accept that his statement that pre-payment customers should benefit and my saying that they possibly will not are, for both of us, a matter of conjecture. In that case, is it not all the more important to create a specific duty to monitor?

Mr. Eggar: I concede the hon. Lady's first argument. It is in the nature of a competitive market that no one can be absolutely confident about what will happen in that market. The evidence of competition in other sectors is that it has done exactly what we claimed that it would in the case of pre-payment customers—reduced prices and improved the quality of service.
However, one of the reasons why we are slowly extending the pilot area into which competition will be introduced from 500,000 customers to 2 million, then countrywide, is so that, as we go along, practical experience is gained, and everyone can evaluate the lessons as the operation proceeds in an orderly way.
Opposition Members referred to new clause 3. As far as I can check, everything that is in new clause 3 is already covered by section 40 of the Gas Act 1986, and the new clause is therefore unnecessary.
Regarding new clause 8, anxieties have been expressed about the possibility that competitive suppliers might discriminate in some way or other—several individual hon. Members made different arguments about that—against people, having regard to where they lived or the way in which they paid. We have given that much thought and we have explored the subject fully in Committee.
We also explored in Committee the issue of what I would call gas access to remoter communities. In fact we had an exchange about that today with the hon. Member for Neath (Mr. Hain). As the hon. Member for Durham, North-West (Ms Armstrong) raised the issue, it might be worth putting on record exactly how the Bill will help. The hon. Lady gave the impression that the Bill would work against such access. The Bill will probably favour villages such as the one she mentioned, but we will not know for certain until we see how the system evolves.
The first way in which the new licensing provisions in the Bill will help is that long-term supply and connection contracts are permitted. There has been a hiatus during the Bill's passage, but that will disappear once the Bill is enacted. The public gas transporters—British TransCo and other suppliers—will be able to offer different approaches to payment. At present, because of the way in which the 1986 Act works, British Gas has to demand an up-front, lump-sum payment. Now, neither British Gas nor other suppliers will have to do that and will effectively be able to ask for payment for connection charges over a long period—spread over five or more years. That will help a number of people who want to convert to gas, but who cannot afford the lump sum.
There is another provision—I do not think that it will help the constituents of the hon. Member for Durham, North-West, as she mentioned a village that was a mile away. Subject to the necessary safety provisions, it will be possible for individuals or groups of individuals to connect their properties to the mains. It is sometimes alleged that the capital costs for connection charged by


TransCo are high and that connections could be achieved more cheaply. It will now be possible to make arrangements on a communal basis and so lower costs. Consumers will not have to rely solely on TransCo; other competitors will offer the service. Agas is already doing just that and winning business from TransCo because it is able to make cheaper connections.
New clause 9 deals with the obligation to publish prices on the face of the Bill. We accept that, at least initially, the prices should be published. We want to include that provision in the licence because we think that, at some stage in the future, by common consent, it may be appropriate for the prices not to be publicly available. It is interesting that some of the competitor suppliers to British Gas that are trying to supply the market for above 2,500 therms are already encouraging people to whom they are offering their services to negotiate prices with them as opposed to accepting a postalised price. I feel strongly that, initially at least, there should be published prices, but I want to retain the flexibility to move away from that position were it felt to be in the consumers' interests to do so.
The hon. Member for Clackmannan (Mr. O'Neill) raised the subject of rights of entry. It is adequately dealt with by schedule 2, the Rights of Entry (Gas and Electricity Boards) Act 1954 and the terms of the licences. Those exercising rights of entry will have to be fit and proper people and there will have to be arrangements so that customers can confirm the identity of individual meter readers.
I hope that I have covered the points that have been raised by Opposition Members in what has been a wide-ranging debate. I regret that I cannot accept the new clauses or the amendments because, in the main, those issues are appropriately dealt with in the provisions in the licence conditions.

Mr. Nigel Griffiths: The Minister has attempted to answer some of the points that have been made, but not very forcefully. He talked about how prices had fallen in the industrial sector after the Gas Act 1986, but there is a widely held view that the industrial sector was partially subsidising the domestic sector. That is reinforced if we consider the average consumption of between 600 and 800 therms for domestic property and the original 25,000-therm threshold.
It is clear that, under the terms of the original 1986 Act, with the minimum threshold of gas consumption of 25,000 therms, for every 35 houses that had to be visited, every 35 meters that had to be installed and every 35 checks that had to be made every two months on those meters—for every group of 35—the gas supplier had to make just one visit to an industrial unit. It is patently obvious that it is far cheaper to deal with 35 factories all using 25,000 therms or more in one visit than it is to visit 35 houses.
There were obvious savings to be made, and they went to the industries and the commercial ventures, with an adequate profit made by the independent gas suppliers. I am not convinced that the same sort of savings will be realised by opening up the market to individuals, when the individual meters will still have to be read.
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The Minister dwelt on pre-payment meters and their value. As a former member of a local electricity

consultative committee in the 1980s, I am aware of the tremendous technological developments of pre-payment meters. They have become an alternative to the court order and disconnection. The big problem is that there is now so much fuel poverty that self-disconnection is a risk. People are forced to take pre-payment meters or sacrifice their supplies. Once they have the pre-payment meter, they have to rationalise their spending.
Often, modern income support benefits do not allow them enough money to keep the house warm and to do the cooking for seven days. On the sixth or seventh day, they do not boil the kettle or have hot meals. That is not an uncommon phenomenon in Britain today. The benefits of pre-payment meters should not be exaggerated. Nor should it be said that there are so many pre-payment meters because residents ask for them. Most people with pre-payment meters have no choice.
New clause 3 places the duty on the Gas Consumers Council to monitor the effects on consumers of the Gas Act. The Gas Consumers Council has been widely praised on both sides of the House and outside the House as an independent body, despite the fact that 99 per cent. of its funding comes from British Gas and only 1 per cent. from the Government. The council has achieved the remarkable feat of establishing itself and its independence so that no one can question it.
It is important when accepting the rationale behind new clause 3 that the list of aspects—the prices to be charged by the new companies, any other terms of supply, the continuity of supply, the quality of services and, as has been stressed by my hon. Friends, the rights of entry into premises—should be monitored, not just by the regulator, but by the Gas Consumers Council. The council is often in the front line of complaints and receives 10 times the number of complaints as the regulator, who is seen as having a firm position on regulation.
New clause 9 involves the publication of the terms of supply. The Minister did not convince the House that placing the terms in the licences rather than in the Gas Bill was a satisfactory solution. At the end of the day, the licences will not be subject to parliamentary scrutiny. We have in six fairly concise lines the terms that require the prices to be charged to consumers for gas supply and any other services to be published and that publication should be consumer friendly. It should be done in consultation with the Director General of Gas Supply and with the Gas Consumers Council with a view to making sure that there is local publicity—if a local area is being served—outlining the terms of supply to all the gas consumers in the area.
We fear that, without new clause 9, there will be a tendency to opt for discriminatory marketing. Although the licensee will hold the franchise for a certain area, the licensee may choose not to market in particular areas, but rather to use what we are familiar with in terms of our own campaigning—profiling techniques to make sure that the right message is getting to the right people. When we deal with our constituents, our approach is discriminatory according to political parties and those who are doubtful.
The problem with new clause 9 is that the companies marketing gas will decide to market only to those houses that look as though they have more bedrooms than others in the geographical area and are likely to use more gas. One meter reading will ensure that the gas supplier will make a larger profit. Therefore, although it will not breach


the licence, as the supply will be available to anyone in the licence area, it will not go out of its way to make sure that people know about it.
New clause 10 places a firm duty on the regulator to protect the interests of the consumer and especially to monitor where there may be discrimination against consumers who are disabled, senior citizens or in receipt of state benefit. The Government and the Opposition are wholly in agreement in those aims. New clause 10 is necessary to ensure that measures outlawing discrimination are given proper effect, and we are not convinced by what the Minister told us were the safeguards in the licences.
It is also important that the director general can impose a definite financial penalty on any new independent gas supplier who contravenes the terms that are widely shared in the House and outside.
Amendment No. 44 outlines the need for effective contingency plans to deal with serious breakdowns in supply. Again, the Gas Consumers Council, which is the major recipient of complaints about breakdowns in supplies, if it did not write to the Minister, has taken up with the Health and Safety Executive and Director of Gas Supply the explosions that occurred during the Christmas period—fortunately without loss of life, but none the less very serious—which may have resulted from the breakdown in supply.
It is important that the Gas Consumers Council, which has knowledge and expertise, is seen as user friendly, has its phone number on every gas bill—we proposed amendments to make sure that it is on every gas bill from any independent supplier—and can vet the contingency plans. The Gas Consumers Council should be assured from its vast database that any contingency plans do not fail due to inexperience or inadvertent omission if it can look back at other examples in its own experience where such contingency plans would not have worked. That is the value of the role of the Gas Consumers Council which can use its body of knowledge and say, "These contingency plans will not work. You may think they are good, but there is a one-in-10,000 chance that they will go wrong, as we saw in 1989 or whenever."
For all those reasons, we have sought to press our arguments so that the Minister is aware of our concerns.

Mr. O'Neill: My hon. Friends and I felt that it was important to give due airing to this group of amendments, which we consider lie at the heart of the Bill.
The Bill will be severely diminished unless the consumers are afforded protection and certain clear rights, unless their mouthpiece is given clear duties and the suppliers have clear responsibilities. We introduced the amendments on the basis that we wanted to give the House an opportunity to discuss them. We have had a full and wide-ranging discussion, so with the leave of the House I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 4

DUTY OF DIRECTOR TO CONSULT ON EXERCISE OF HIS FUNCTIONS

'After Section 39 of the 1986 Act there shall be inserted the following section—"(39A) In performing his duties under this Part, the Director shall—


(a) take all reasonable steps to consult persons or bodies appearing to the Director to be representative of persons or bodies likely to be affected by the performance of those duties; and
(b) take all reasonable steps to explain and publicise his reasons for any decision made under this Part.".'.—[Mr. O'Neill.]

Brought up, and read the First time.

Mr. O'Neill: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss also the following: New clause 5—Grounds for removing Director from office—
'Section 1 of the 1986 Act shall be amended as follows:
(a) In subsection (2) by omitting from the word "years" to the end of the subsection and inserting the words "unless re-appointment can be agreed upon in conjunction with the Gas Consumers Council"; and
(b) In subsection 3 by inserting after the word "misbehaviour" the words "or a demonstrable record of failing to exercise his responsibilities in a manner which protects the interests of consumers; and in considering whether any of these grounds have been established, the Secretary of State shall take account of an annual submission about the performance of the Director which shall be made to the Secretary of State by the Gas Consumers Council.".'.
Amendment No. 46, in clause 1, page 2, line 27, at end insert—
'(3A) In performing their duties under subsections (1) and (2) above the Secretary of State and the Director shall consult with persons or bodies appearing to the Director to be representative of persons likely to be affected.'.

Mr. O'Neill: We have been talking about the role of the regulator and the accountability of the director general. Earlier in our debate, I mentioned that one important aspect of the legislation is that it provides us with the opportunity to consider the effectiveness of the regulatory regime which now applies to the gas market.
Although we do not consider that anything produced by the House is inherently imperfect, we nevertheless believe that from time to time opportunities arise for us perhaps to improve on the work of the House.
It is fair to say that the British political system came to regulation fairly late in life, especially when we consider the role of the utilities in other countries—particularly the United States, where the regulatory tradition has grown up certainly over the decades of this century. When we consider the regulation of the railways in the early days, it is clear that the movement for regulation came from both the right and the left of the political spectrum. On the left, there were objections to what were seen as the robber barons of the railways and the cartels that were established. On the right, there were objections to what was seen as an offence to competition and various forms of sharp practice introduced at the expense of the passengers. As a consequence, there was a somewhat uneasy consensus, as from different premises the same logic led to the view that regulation had to play a part in American commercial and business life.
The United Kingdom stumbled on regulation almost as an afterthought, when monopolies were created following the privatisation of the former state monopolies. In a number of instances, those monopolies have existed virtually without question over the past 10 years or so. This is perhaps the first opportunity to assess the effectiveness of the regulatory regime in respect of gas.


Because of the changes in prospect for other aspects of energy provision in Britain, the other energy regulator is also coming under scrutiny.
While I do not wish to stray beyond the bounds of order, there are occasions when analogies can be drawn or links can legitimately be made. I say that by way of prefacing my remarks; I do not wish to stray out of order. Madam Deputy Speaker, I shall try if not to catch your eye then to catch your grimace and return to the main thrust of my argument.
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New clause 4 seeks to impose upon the regulator a duty to consult, explain and publicise his or her activities. That duty involves accountability, openness and transparency. We believe that it is important to require the regulator to justify any modifications that he or she makes to any previous decisions. At present, the regulator is required to justify any licence modifications. We would like to think that that requirement will be extended to other activities and that a range of organisations will play a consultative role.
In discussing the previous new clause, we referred to the significance of the Gas Consumers Council. It is clear that there is a network involving groups such as the National Consumer Council, the Consumers Association and the Gas Consumers Council. We have seen some co-ordination between those bodies in the lobbying in relation to this legislation. They all seek to represent consumer interests in a different way and we believe that they should be consulted when decisions are taken.
At present the regulator is called to account largely by way of the annual report. We do not think that that is the most satisfactory accountability measure. Indeed, the regulator, Mrs. Spottiswoode, has said that the annual report is a most inadequate means of conveying the full burden of her interests and concerns. Perhaps we should examine the way in which other regulators operate. The chief executives of some electricity companies reported that they submit a sizeable number of papers and reports to the appropriate regulator. Presumably he digests them, meets the companies concerned and, without any real comment, subsequently distributes letters which begin "I am minded that" and contain a series of unjustified conclusions.
I do not believe that that is a satisfactory way for a regulatory regime to operate. I think that it is important that the companies which are being regulated, the consumers whose interests are being protected by the regulator and the investors whose interests often differ from the staff of the regulated companies should be involved—not necessarily individually—in the decision-making process. They should be provided with information sufficient to inform them as to what the regulator is thinking.
Recent changes to the system have not evoked a fulsome response from the regulator. The announcement of the direct debit discount scheme caused considerable controversy. Under the scheme, those customers of British Gas who opted to pay their gas bills by direct debit received an immediate £20 discount. That caused considerable concern among those individuals, many of whom were elderly, who paid their gas bills on time and in full and who never missed any of their instalments. I am sure that you have come across them, Madam Deputy Speaker, as I have when performing my constituency

duties. They are the kind of people who like to have things in order, who do not have a lot of money and who have developed very good book-keeping habits over many years. They like to be very precise about their calculations and they never fall behind in their payments or in meeting their financial responsibilities.
Many of those individuals do not have bank accounts—they may have money in the Post Office, but they certainly do not have cheque accounts or the facility to make direct debit arrangements. The whole business of getting a cheque book and a cheque card, trying to remember a personal identification number and so on would have been far too much bother because their system worked very well.
Many people bitterly resented what they considered to be the discrimination that the £20 direct debit discount represented, and the Gas Consumers Council was inundated with 3,293 complaints between 17 November and 8 December. That information was transmitted to the director general and to the regulator, whose reply we are still awaiting. We believe that a controversial issue of that nature requires a more immediate response.
The present tariff formula was arrived at in 1992. It was the subject of some consultation and in the end the RPI minus X formula was established alongside the energy efficiency factor element in the Bill. It was never put out for consideration or discussion; it was a foregone conclusion. It was felt at that time that there could have been more consultation about the matter.
In recent months we have examined the question of the E factor involving that part of the Gas Bill which is to fund the energy efficiency schemes for which the Energy Savings Trust has been given responsibility and which we shall discuss in the context of subsequent amendments. The present regulator inherited the duty from her predecessor and she seems rather reluctant to carry it on. As a former Treasury civil servant, I think that she assumes that she is not responsible for collecting money from companies; she considers that to be a tax-collecting role.
We are very conscious that there has been some difficulty because the regulator was not instructed properly and therefore was reluctant to carry out her duties as she perceived them. She did not consider them to be legitimate duties. We do not believe that there was a clear chain of regulator responsibility or accountability. There have been similar instances recently involving changes in the price formula.
As I said earlier, the price formula is calculated on the basis of the rise in the cost of living less a certain figure. For a number of years, the X in the RPI minus X formula represented five. However, when British Gas had to change its organisation as a consequence of the Monopolies and Mergers Commission report and the new arrangements came into play, the X factor fell from five to four. It was assumed that that was to compensate British Gas for the expense of changing its internal organisation, but that was never made specific or clear.
No means exist, at least at present, whereby the regulator can be called to account and asked in an open way, "Why have you done this?" That lack of transparency and accountability diminishes the regulator's authority. It is fair to say that openness leads to better decision-making. Accountability means that a range of views are seen to be taken seriously by the regulator.
There is some debate about whether the passage of the legislation will result in the continuance of regulation. It is assumed among some of the more exotic plants in the free market garden that, once perfect competition has been established, we will no longer need regulation. That is reminiscent of the arguments that Lenin put forward about the role of the state when he said that, once communism had been achieved in its pure and perfect form, no need would exist for the dictatorship of the proletariat or for the state. Experience has shown that that idealism was misplaced.
The same sort of thinking in relation to perfect competition is probably equally misplaced. That is one of the problems with affording to academics the opportunity of putting their academic ambitions on to the blackboard. Allowing them to put their ideas into practice lends scope for massive errors of judgment. We shall have a regulatory system and regulators for some considerable time and it is important that regulators are accountable and are seen to be open and transparent in the way in which they carry out their duties.
It is equally important that other ways exist of calling regulators to account. There are three standard means of dealing with a regulator, if I may put it that way. The first is to seek a judicial review. That is expensive and often time-consuming. The Minister looks dubious. I suspect that he was a solicitor in his previous incarnation and that he is therefore not so aware as many of us are of the public's anxieties about paying his profession any more money. On the grounds of expense or delay, judicial review is a dubious method of calling regulators to account. It is effective, but it can be dear.

Mr. Hain: My hon. Friend might note that, as the Minister is likely to lose his Brecon and Radnor seat to a Labour candidate at the next general election, he will be looking for work as a solicitor, so judicial reviews may come in handy.

Mr. O'Neill: I should like to think that, when the Minister leaves the House, he will be able to earn a crust, but we do not want him to earn a cake on the scale that some lawyers seem to earn at present.
A judicial review is one option. The second is a reference to the Monopolies and Mergers Commission. The third is a regulator's failure to be reappointed to the job. Those sanctions are not sufficient. A clearer indication should be given of the grounds on which an individual who is not fulfilling his responsibilities could be removed. The Gas Consumers Council, which we have already spoken about as the most effective monitor and recipient of information about the working of the gas market, should be consulted. That is the burden of new clause 5.
If a demonstrable record exists that an individual has failed to exercise his responsibilities to consumers, that should be grounds for his removal. We should like to think that the Gas Consumers Council report would be given due weight by the Secretary of State for Trade and Industry if the possibility of removal were to arise. I do not consider those remarks to be a reflection on the activities of the present regulator, who has not blotted her copy book in ways that would be grounds for removal under new clause 5.
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On the other aspect of the accountability of the regulator to which we want to draw attention, amendment No. 46 states that the Secretary of State and the director should consult
with persons or bodies appearing to the Director to be representative of persons likely to be affected.
The emphasis there is slightly different from the emphasis that I placed on the bodies which are deemed to be the natural representatives of consumers—the Gas Consumers Council and the Consumers Association. On occasions, local authorities may be the most appropriate organisation to consult. Where we were dealing with fairly small groups of residents, tenants and housing, residents associations may be the appropriate body. One can envisage local authorities providing gas heating arrangements, which might have to be taken into account.
We are concerned about providing a means whereby the regulator should be more answerable to Ministers and to the community. As I said earlier, regulators will have a role in the British political and economic framework for many years to come. The provision of basic services such as water, electricity and gas have of necessity to be regulated because they are of such significance in the lives of ordinary citizens. As a consequence, we want to ensure that the gas regulation system, which is as far as our remit extends, has within it a degree of accountability, both to the Secretary of State and to consumers, individuals and the bodies that represent them. This group of amendments would extend and lend credibility to the functions of the regulatory process in Britain, and would contribute to the proper working of the gas energy market. For those reasons, we are happy to commend the amendment and new clauses.

Ms Coffey: I suppose that the central issue is who regulates the regulator. At present, under the Gas Act 1986 and the proposed Bill, the regulator has a duty to pay special interest to the disabled and pensioners. I understand that it would be difficult for a group of people—perhaps a pensioners group or the Gas Consumers Council—to hold the regulator to account if they felt that she had not paid them special interest, as laid down in her duties to customers. I understand that a pensioners group could not refer the regulator's action to the Monopolies and Mergers Commission.
The only course of action open to it would be to take the regulator to a judicial review, which is an expensive process. Although there is an existing legislative duty on the regulator to consider the needs of those two groups, if he or she failed in that respect, how would those groups challenge the regulator except by the expensive process of judicial review? The market has no conscience, and the gas market will be no different. Conscience is provided by the regulator and the interests of consumers being part of his or her duties.
In Committee, the Minister refused to accept an amendment which would have instructed the director general to take into account not only the disabled and people of pensionable age but consumers on low incomes. That group, to which everyone has referred during the Bill's progress as of particular concern, appears to be missing from the regulator's social conscience role. The regulator has no duty to protect that group.
Because there is no duty on the regulator to protect low-income customers, pressure to do something about British Gas standing charges has not been exerted. I


understand that those charges have decreased, but it would be perfectly possible for British Gas not to impose them at all but to incorporate them into the cost of supply, then produce a tariff that was the same for each customer. Standing charges act to the detriment of low-income customers because they account for a disproportionately large part of their bills. If the regulator had a duty to protect low-income customers, there might have been more pressure to abolish standing charges. As that duty does not exist, the regulator cannot be held to account for the problems that have arisen with standing charges. They will continue to pose a problem to low-income customers, who will not benefit from gas competition in the way that other customers will benefit.
The Minister will say that the regulator's role is to be independent, but no regulator is that. The individual regulator has beliefs and experience, and his or her actions have political implications. The intent may not be political, but sometimes the consequences are political. There is no independence from political beliefs—with a small "p"—in the regulatory system, even though there may be independence from party political beliefs.
Accountability therefore becomes crucial. The only way to ensure real accountability is to specify precisely what is expected of the regulator, then hold the regulator to account as to whether he or she has satisfactorily discharged their duties. No such mechanism currently exists. Parliament cannot do that. The regulator is not accountable to Parliament. She may appear before a Select Committee and account for her actions, but she is not accountable to the Committee, to Parliament or to the Minister. Neither is she accountable to consumer groups. If they believe that the regulator has failed in her regulatory duties to protect particular groups, they cannot call her to account, except through expensive judicial review.
Everyone should be accountable. Being accountable to a is another. The new clauses seek to ensure such accountability.

Mr. Hain: New clauses 4 and 5 propose increased accountability for the gas regulator. I shall put the arguments in a broader philosophical framework because it is necessary to understand how the Government's approach to regulation differs from that of Labour.
The Government endorse the free market as the agency by which equilibrium will be created and everyone will broadly benefit. Regulation is an afterthought grafted on to that system—from the point of view of the free marketeers, something that started as a monopoly needed regulation. The Governmen0000 believe, as my hon. Friend the Member for Clackmannan (Mr. O'Neill) said, that, as competition gradually grows more dominant and universal, regulation should wither on the vine. That is one model of regulation—not a principle dynamo of Government policy but a necessary adjunct to the competitive market.
The second approach to regulation—the one that socialists adopt—is quite different. Instead of favouring a free market economy, it favours a democratic economy in which market forces play an important role. An interventionist regulatory mechanism would seek, clearly and deliberately, to promote social good, common good, economic efficiency and strategic interests rather than competition and expecting those social and common goods to spill out as a consequence.
The growing debate on regulation is informed by both perspectives. The existing regulatory system enjoys little support, except from Ministers and their cohorts. Labour spokespersons, the Select Committee on Trade and Industry, National Power's chairman, John Baker, and the gas regulator, Clare Spottiswoode, have all argued for reform of the regulatory system. It has grown like Topsy in the past 10 years. It is now ad hoc, complex, over-technical and deeply flawed. There is no consistency in the decision of regulators as between one industry and another. The regulators within any one industry—and gas is a good example—are not necessarily consistent. Decisions made by Clare Spottiswoode do not necessarily stand in line with those made by her predecessor, Sir James McKinnon. I will return to Sir James, because he is a good example of why the system needs reforming.
It is also important to note—this is why the two new clauses are very important—that the regulatory system in the gas privatisation programme in particular was largely an afterthought. It was the bait to catch the privatisation fish. When the Government realised that they could not privatise monopolies without placing some check on them, they hastily thought up a regulatory system, which was rushed in and ill-thought-out, and which developed under its own momentum rather than being strategically planned from the outset.
In the process of that development, competition has been obsessively elevated above all other possible objectives of the regulator. For example, at a meeting in the Palace of Westminster some months ago, the gas regulator, Clare Spottiswoode, said:
Regulators can never do as well as competition.
That is very interesting because it informs us about how she sees her role: to promote competition, virtually at all costs, and over and above other strategic or social objectives that a regulator should have responsibility for promoting. If the regulator were subjected to proper accountability under the two new clauses, she would have to have more regard for other matters.
In short, competition drives the regulatory system. The gas regulator sees it as her job to make changes to the pricing formula, to conditions for new market entrants or to the regime under which they operate so as continuously to promote competition and thereby—she believes and the Government obviously accept—create a situation from which gas customers will benefit. Such benefits have clearly not followed. Certainly there is no logical reason in principle why they should, as we heard in the previous debate on cherry-picking and social dumping.
Although competition has been put above all other objectives, it was not the primary objective in the privatisation legislation, such as the Gas Act 1986. Competition was one of a series of other objectives, above which it has been elevated, with the Government's blessing and under the regulator's ideological remit. To that extent, the idea, as the Minister said and as the gas regulator has been heard to argue, that regulators are non-political is total nonsense. They make decisions that advantage certain groups and disadvantage others. That is politics. They are just as political as any Back Bencher—and a lot more powerful to boot. They are political animals. Their decisions are highly political. The idea that, by hiving off regulation to an independent appointee, decisions and policy consequences become non-political is nonsense and a contradiction in terms. I repeat: their


decisions are highly political in their impact on energy policy, because they benefit certain social groups and disadvantage others.
In that context, a particular feature of this regulatory system, which the new clauses would at least go some way to address, is a compartmentalised type of decision making, in which the gas regulator, for example, makes decisions about gas competition while being quite oblivious—at least apparently oblivious—to the consequences for energy policy. I say energy policy, but there is no energy policy. Competition is energy policy, which means we do not have one. All sorts of anomalous consequences result. Within five years, we will have gone from nil to 25 per cent. gas-generated electricity. That will be achieved only by closing pits, at an estimated cost of £1 billion to the taxpayer in unemployment benefit and other costs. That is a consequence of the promotion of competition in gas and of allowing competition in the electricity industry to use gas, for which it is not really suitable.
British Gas has consistently—I do not think that it bothers any more—made clear its opposition to using gas for power station baseload, for which gas is not suitable. Such use will diminish the life of gas reserves in the North sea by 15 years and divert those reserves away from their much more efficient use as an on-the-spot domestic and industrial fuel. Gas should be used like that, yet we are blowing it away.
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When I asked the gas regulator to address that issue, she said that it was nothing to do with her. She has an interest only in promoting competition in gas. Indeed, her decisions have virtually forced British Gas to sell more gas to power stations, which is against the long-term interests of Britain, the gas industry, energy policy and gas customers. It is against our long-term national interest because UK dependence on energy from overseas suppliers raises important strategic issues, about which the regulators do not believe they must be bothered. We already have a big balance of payments burden as a result of importing coal and other energy sources. That will be increased by imports of gas in future, including from very unstable regions in Asia and the middle east.
If the gas regulator were more accountable to public, to Parliament and perhaps to the Select Committee on Trade and Industry, and if she were required to give reasons for her decisions, the use of gas for power stations might have been included in the debate. We could have questioned whether burning it away in power stations was a sensible use of gas or whether we should conserve it and thereby make us less dependent on foreign suppliers.
The gas regulator has—apparently—neither the power, the will nor the interest in intervening to protect the common good as opposed to the private good of the competing gas companies. The promotion of competition in the gas sector has been oblivious to the knock-on consequences for other energy sectors and for the wider industrial structure and economic interest of Britain. It is also interesting to note—I shall not develop the point, because we shall cover it later—that promoting competition in such a way has relegated conservation and the entire environmental agenda to second place at best. There is a crying need to reform the regulatory system to ensure that wider social and strategic interests are met.
It is also important to recognise that the gas regulator, in common with other regulators, has enormous personal discretion.

Mr. Simon Burns: That is right.

Mr. Hain: One of the Government Whips mutters from a sedentary position, "That is right." The gas regulator has considerable discretion, which the Government have encouraged. Indeed, they praise it because they say that it removes decisions from the political arena, from Parliament. What are we here for, if it is not to have some influence, as Members of Parliament, over crucial public policy areas such as gas supply and the wider energy context in which that operates?
In considering the degree of discretion, I need quote no more relevant a figure than the previous gas regulator, Sir James McKinnon, who developed a personality cult in the industry, using his discretion to an enormously egotistical degree. In successive press releases, he even described himself as the Santa Claus of the gas industry. Industry commentators started to refer to regulation by press release, counting how many times his name and picture appeared in Ofgas publications. During his tenure, Ofgas performed a series of U-turns on successive issues. He changed his mind three times on the structure of the industry. He veered from supporting the integrated nature of British Gas one year to its complete destruction the next and he finally opposed the limited break-up suggested by the Monopolies and Mergers Commission.
Such policy gymnastics were very destabilising. Perhaps that is why Sir James McKinnon went—perhaps the Minister will reveal all. Clare Spottiswoode has been a much more admirable gas regulator, which is welcome, but there is enormous scope for discretion, which was abused by Sir James McKinnon and could be abused by any other gas regulator.
In that regard, I need seek no greater confirmation than the behaviour of the electricity regulator and the recent intervention of Professor Stephen Littlechild on prices in the power share sales. That discretion challenged the heart of democratic politics. Decisions are being hived off to independent appointees that should properly be brought within the system of political accountability. That should not be confused with operational responsibilities.
I am not arguing that the regulator should be held accountable or forced to consult in respect of every detail of regulatory policy, but I am concerned that the broad political and public policy trajectory of regulation should be much more accountable.
There is no real transparency, as my hon. Friend the Member for Clackmannan so eloquently said. Effectively, the regulators are the high priests of public policy. They make significant decisions and they are more powerful than almost all Back Benchers. They are even more powerful than collective groups, such as Select Committees, with regard to the impact of their decisions.
There is a need for greater accountability. The objectives of the regulators should be changed so that they are given much more responsibility for the social consequences of their decisions and for the strategic implications of regulatory decisions, especially with regard to energy policy and the need for international competition.
At the moment, the regulator's decisions favour domestic competition. They pay very little regard, if any, to the need for international competition. At the moment,


just about every foreign-owned or controlled gas supplier is being invited to clean up the British market, but British Gas—the national champion—cannot enter foreign markets on a reciprocal basis. Indeed, under its current structure, the European Union specifically prevents British Gas from getting into Europe in the way that European companies can enter our markets.
Why is the gas regulator not addressing that problem? Why is she not banging on the Minister's door saying, "I want to change the regulatory system in order to make international competition a much greater priority than it is under the present regime"?
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We have become the laughing stock of the international gas community. Our competitors, NOVA in Canada, Gaz de France, American-owned Enron, Italgas, Ruhrgas, Tractebel, Gas Natural, the Russian company Gazprom and BHP in Austria, many of which are state-owned, are gaining a massive world lead at the expense of British Gas. We are not concerned with international competition as the regulator is so obsessed with promoting pygmy competition in the domestic market. There is no regard for the industrial and strategic interests of the British economy, which would be advanced by the promotion of international competition and in respect of which British Gas would be able much more effectively to conquer the world markets and become a world leader and one of the top four or five global gas players, which I believe will happen when the market shakes out.
For those reasons, the regulatory system is fundamentally flawed. My hon. Friend the Member for Stockport (Ms Coffey) asked a question that is becoming increasingly important: who regulates the regulators? No one other than the Government and the existing regulators—and not even all of them—defends the existing system. There should be radical reform, and the new clauses would go some way towards achieving that.

Mr. Eggar: We have had another wide-ranging debate. The first issue to be raised was that of the direct debit discount. As is now fairly well known, British Gas, I am told, is planning to introduce a new scheme later this year which will give direct discounts to prompt payers who choose not to pay by direct debit. It justifies the current direct debit discount by arguing that the discount reflects the lower average cost of serving direct debit customers as against other customers.
The hon. Member for Clackmannan (Mr. O'Neill) said that the regulator had not responded to several letters on that issue. It is my understanding that it is her provisional view that the discount does not involve undue discrimination. That is obviously what she has to consider—[Interruption.]The hon. Member for Stockport (Ms Coffey) has a marvellous mouth, but to look at it in a totally uninterrupted way is slightly taxing on the eyes.
According to the regulator, the discount does not involve undue discrimination. However, the director general is considering representations, including several letters to the contrary, and at the moment she is not satisfied that there has been any contravention.
We did not spend much time on new clause 5. The implication of the remarks made by the hon. Member for Clackmannan is that even the hon. Member for Edinburgh, South (Mr. Griffiths) recognises that that new clause goes a little too far. The evidence for that is that

not even the Gas Consumers Council, which would be given the powers, actually wants them. It does not believe that it is equipped for that or that that is its role. I enjoyed the elegant way in which the hon. Member for Clackmannan trotted around new clause 5.
It is fair to say that most of the debate has revolved around new clause 4, and in particular the accountability issue alluded to in it. There is perhaps a fundamental difference between the Government and the hon. Member for Neath (Mr. Hain) because, as I listened to him, I could not make up my mind whether he was saying that the regulator should have more powers to take into account issues like international competition, or whether she should have fewer powers because she was not democratically accountable. I was not clear what he meant by democratic accountability.
There is clearly a difficult balancing act. If we are to have a proper system of regulation, it must not be at the beck and call of political intervention by whoever happens to be the Minister of the day. Whether that applies from the Opposition Benches—for example, to ensure that the hon. Member for Neath's valley gets gas, which was the argument he made in Committee—or from the Government Benches to achieve an objective which we felt was particularly attractive from our constituency point of view, any system of regulation must be properly independent from the political process in terms of direct intervention.
Obviously Ministers will be accountable to this place for certain policy issues. An example of that which relates to the structure of the Bill is the standard conditions. We regard the standard conditions as absolutely essential to the structure of the licence because a veto is vested in the Secretary of State. I believe very strongly in the principle of the independence of the regulator, but that independence must lie in a framework, which ultimately must be decided by Ministers.
The judicial review cannot be dismissed lightly. From a Minister's point of view and the exercise of discretion that he may have—not in this respect, but in others—and from a regulator's point of view, judicial review is a very important aspect of accountability. That is not always recognised, because it is not often that there are judicial reviews of Executive decisions. The regulators and I both find that power to be a significant form of accountability. Reference was also made to the Monopolies and Mergers Commission, and the issue of how individual decisions are reached was also raised. I referred to that in terms of the standard conditions. We exercise a veto in that area.
Further scrutiny is afforded by Select Committees, and that is an issue for the House to consider carefully. We must look at the way in which the Select Committees on Trade and Industry, the Environment and Employment have called the gas regulator to account. I am a believer in Select Committees, and I think that the House should use them more effectively. The House should reflect on the relationship between Select Committees and the regulators, although there is no obvious prescription as to how that can be done. Select Committees, like the National Audit Office, provide an important form of accountability.

Ms Coffey: The Minister is suggesting that the Select Committees have not held the regulators to be sufficiently accountable. However, the gas regulator said that although the Select Committee can hold her to account—as the


Committee can hold to account a Minister—the regulator is not accountable to the Select Committees. She is accountable in the sense that she has to give an account of her actions, but she is not accountable in the sense that the Select Committee has any direct influence or control over her actions. That is the key point.

Mr. Eggar: The hon. Lady and I part company there. She is arguing for politicians—in this case an all-party Select Committee—to have the power to instruct or direct the regulator, whereas I believe strongly in the independence of the regulator. I was not being critical of Select Committees. I was simply saying that that is an issue for the House, because the regulators could be made more accountable to the Select Committee system if a little more thought was given to doing so. I do not see that essentially as a matter for the Government.
I hope that my answer has been useful. I am afraid that, for the reasons I have given, I certainly cannot recommend that new clause 5 be agreed to. I do not think that the Opposition want to press it to a Division. On the other points in the debate, they got the balance right.

Mr. O'Neill: The discussion has contained the germ of a good debate. Most of the speeches of my hon. Friends, while emphasising slightly different elements, dealt with the general approach to regulation, which has produced a whole that is greater than the sum of its parts. The Minister has, for once, avoided bluster and has endeavoured to engage in a genuine debate. It is regrettable, therefore, that no other Conservative Member has sought to contribute. A couple of individuals have come into the Chamber as our debate has come to a close, but no one from the Opposition Back Benches has been prepared—

Mr. Nigel Griffiths: The Government Back Benches.

Mr. O'Neill: I am getting into a habit, but that description will be appropriate before too long.
The point is that no one from the Government is not so much prepared to defend the regulatory system but to discuss it. To that extent, the Minister's remarks are evidence of a lack of thought and discussion. He went through the standard means of accountability of the regulator, including a judicial review. I know that that is a hobby-horse of the Minister's, and we have debated that matter in Committee. His experience is greater than ours, and he believes that the threat of a judicial review is of no small significance in concentrating the minds of individuals.
We have seen references to the Monopolies and Mergers Commission used in much the same manner of megaphone diplomacy in the past. Where we part company with the Minister is on his touching faith in Select Committees. If there is a fundamental flaw in the Select Committee system, it is that it has been grafted on to the House of Commons without a proper separation of powers. Those countries in which the committee system operates most effectively use committees as a check on bodies in which those involved have no direct interest.
Our Select Committees contain individuals who wish to join the Executive at some stage, or those who have been on it and are embittered or indifferent. I do not think that there is a correct relationship between our Select

Committees and the Executive. I am not sure if it would be within the bounds of the proceedings of the House—although given the flexibility of our Standing Orders, pretty well anything is possible—if we were to have a mechanism whereby individuals who were nominated to become regulators could be subject to an interview before their appointment. They would then have to be confirmed in the post by the House. That is not the way in which the House operates at the moment.
During our debates on the Coal Industry Act, we suggested that the chief executive of the Coal Authority would have to be confirmed or interviewed by the Select Committee. In some respects, that was the kind of thing that one does in a Standing Committee—flying a kite. Our Select Committee system is useful for collecting information, but it is never very good at drawing conclusions, because the conclusions tend to be the ultimate compromise.
Some Select Committee conclusions and recommendations are eventually taken on board. Sometimes, in the longer term they have a role in establishing a consensus, but, as a means of dealing with the serious political problems to which my colleagues and I have alluded—for example, the direct debit issue, the establishment of the price formula and so on—if there is to be immediate action, Select Committees are not good at getting the message across. They can inform debate, but ultimately they do not play a conclusive role.
I take the Minister's point about the National Audit Office. Indeed, the Public Accounts Committee can look retrospectively at matters, but it cannot be proactive. In the regulatory sector there might be occasions when proaction is appropriate.
We have had the beginnings of a good debate. I do not suggest that we go on any longer, because we have other business to attend to. It is unfortunate that no Conservative Back Bencher was prepared to take part in the debate. However, the matter has been ventilated. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 6

DUTY OF SECRETARY OF STATE AND DIRECTOR TO CONSULT WITH HEALTH AND SAFETY EXECUTIVE ON SAFETY QUALIFICATIONS OF GAS CONTRACTORS

'The Secretary of State and the Director shall each have a duty to consult with the Health and Safety Executive with the objective of securing that any public gas transporter, retailer, shipper or supplier who may have cause to undertake work on any gas supply meter, gas fitting or appliance shall ensure that—

(a) any employee or third party contractor is suitably qualified in the relevant aspects of gas distribution, installation or service;
(b) any third party contractor undertaking such work is registered with an appropriate recognised trade body approved by the Health and Safety Executive.'.—[Mr. Nigel Griffiths.]

Brought up, and read the First time.

Mr. Nigel Griffiths: I beg to move, That the clause be read a Second time.
New clause 6 deals with critical safety issues. The House will be aware of the Monopolies and Mergers Commission's report on gas under the Fair Trading Act 1973. The report, published in August 1993, stressed that safety was a major consideration in the removal of the


monopoly. If electricity is switched off, it leaves no problems behind. If gas is switched off, pilot lights can remain on. Gas requires greater skill and vigilance.
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Fortunately, gone are the days when there was widespread fear of gas and when the consequences of gas explosions were felt by all. None the less, there is an alarming number of gas incidents. I am a founder member of Consumer Safety International, which assists people who have lost relatives or suffered injuries abroad because of gas, particularly in Spain, and of CO-GAS, which is a British-based organisation that campaigns for safer gas appliances.
New clause 6 gives the Health and Safety Executive an overview. It would make the Secretary of State and the Director General of Gas Supply duty bound to consult the HSE, to ensure that gas transporters, retailers, shippers or suppliers were suitably qualified.
The Government have had a big drive to encourage people to register with the CORGI scheme. I appreciate the work of CORGI and of its skilled engineers, but there are various estimates—none is below several thousand—of unqualified, unregistered people installing gas supplies in highly dangerous circumstances.
I notice from the Government's statistics that a large number of appliances still have dangerous gas fittings. In 1993–94, for example, 445 dangerous boilers, 44 dangerous water heaters, 330 dangerous gas fires and 112 dangerous cookers were identified. There were a total of 1,467 dangerous appliances, which was an increase of more than 200 on the previous year, and that was an increase of almost 500 on the year before. In the past three years, there has been a trend of a steady increase in the notification of dangerous gas fittings, when the gas for domestic premises was supplied by one gas supplier.
As the market opens up, it is very important that proper safeguards are in place, to ensure that the domestic gas consumer is not put at risk. There are many reasons for faults, and again the available statistics are helpful. For example, in 883 cases, the manner of installation was deemed to be dangerous. Modifications and alterations caused danger in 259 cases. Servicing and maintenance problems occurred in 87 cases and design problems occurred in 32 cases out of the total of 1,467. Far too many dangerous fittings required attention. Once the Bill has been passed and the market has been deregulated, we do not want an alarming upward trend, which is the primary reason why we have tabled the new clause.
The Gas Consumers Council has made representations and runs campaigns for the register of Corgi installers to be made available to consumers and for the literature and leaflets to be user friendly. However, it also wants a proper register established to ensure that third-party contractors or employees of the new independent gas companies are suitably qualified in all aspects of gas distribution, installation and service.
There is a general fear that the installation of gas may become deskilled. Certainly, in the past, gas engineers were not only highly trained, as they still are, but worked to tolerances that did not allow the possibility of accidents in any number. Anyone who talks to gas engineers these days knows that cuts by British Gas, in the face of private sector competition, have meant that, whereas engineers were trained to work to tremendously fine tolerances, standards have slipped a little. I do not intend to alarm

the public—I believe that there are still adequate safeguards—but we do not want any further slippage, and we certainly do not want the new third-party contractors employing unskilled and unqualified people.
I shall be interested to hear what the Minister has to say in defence of not ensuring that any third-party contractor is using suitably qualified personnel. The Government joined us in supporting the CORGI scheme, but we want to ensure that the several thousand people who are currently practising unregistered and unqualified are driven out of business—and quickly.
We know of the tremendous risks not only of explosions but of carbon monoxide poisoning caused by fumes from faulty gas appliances and flues. We want to be sure that, once the gas market has opened up, Ministers, the regulator and the Health and Safety Executive are convinced that companies that succeed in getting a licence and that are involved in the installation and repair of appliances and the distribution of gas are suitably qualified and do not pose a risk to themselves or, more important, to the public.

Mr. Kevin Hughes: I, too, welcome the opportunity to debate the safety aspect of the Bill, which is probably one of the most important aspects for the consumer. Safety is probably uppermost in people's minds when gas appliances are installed in their homes. I should like to think that the Government will support new clause 6, but I doubt that they will. The fact that they will not is very unfortunate.

Mr. Eggar: How does the hon. Gentleman know?

Mr. Hughes: It is a guess, but we shall see at the end of the debate. I would not be able to bet on it at William Hill; the odds would certainly not be good anyway.
It is a pity that the Government will not support the new clause because it is fundamentally about protection and safety. It is designed to secure safety standards and service for consumers in future, under arrangements similar to those enjoyed in the present system, under British Gas. That means that appliances will have to be repaired by fully qualified and trained installers. Preferably, they should be properly registered and be able to provide expertise equal to that provided by TransCo and British Gas at present.
The new clause deals with the proper training of installers who carry out appliance repairs. Under the Bill, TransCo will be called out to deal with any difficulty with supply and will have responsibility for making an appliance safe. The repairs will not be carried out by TransCo, however, which will be responsible only for safety upstream of the meter. Consumers will be left with a list of CORGI-registered suppliers, and will have to arrange for the repair themselves.
There is concern about what the fragmentation of the repair service will mean in practice. Consumers will be left to take pot luck with the list of contractors that is handed to them. At present, British Gas engineers can make arrangements for appliances to be repaired and can leave temporary equipment, such as electric heaters, on loan to customers who may be vulnerable to cold and who do not have any other source of heating. Under the new system, that sort of comprehensive service and the benefits that it brings to consumers might be lost as householders are left to fend for themselves.
The annual report of the Gas Consumers Council this year pointed out that a register of competent installers that is both accessible and meaningful to domestic consumers and advice agencies has not yet been produced. The Health and Safety Executive is considering that matter as part of its review of the CORGI registration scheme, which is welcome news.
The GCC has consistently pressed for such a register to be made available to gas consumers. At present, such information is not published. The council wants information on the hours and type of work that an installer has CORGI registration to undertake, which is particularly important. When competition is introduced, it is vital that such information is published in an accessible format and is readily available to both suppliers and consumers.
The Minister will remember that in Committee we discussed training for some CORGI scheme members compared with that for TransCo engineers at present. Unfortunately, not all CORGI-registered engineers will be trained in all types of gas appliances. Different levels of registration will apply for CORGI installers, and they may not always have the experience or expertise that British Gas engineers have. That is of concern, because a number of cases were raised in Committee in which mistakes had allegedly been made by CORGI-registered firms, which is deeply worrying.
CORGI-registered installers who work outside the competence for which they are registered are breaking the law, but customers may not know the level of competence of an installer, so adequate information must be available to consumers on that issue. At present, the business rather than the individual is given CORGI registration, which is a further potential source of confusion for the public in the light of the new circumstances that are proposed.
In the event of contracting out and even subcontracting, the parent company is sometimes not aware of who is carrying out the work. In some circumstances, it seems to lose control of who is handling the screwdrivers, spanners or whatever tools are needed to do a particular job. In this case, it could be dangerous if the parent company were not fully aware of who was carrying out repairs to appliances in people's homes.
As the Minister knows, I worked in the mining industry for a long time—

Mr. Eggar: How long?

Mr. Hughes: Too long for me to remember, but more than 20 years. The Minister is probably aware of the number of accidents that occurred when outside contractors came to work in the industry. I shall not develop this point, Madam Deputy Speaker, but it is worth noting that the safety record of outside contractors was far worse than that of British Coal. I am worried that, if we start to contract out, as is almost inevitable, a similarly poor safety record may apply to those sent out to fix people's gas appliances. We should make it clear that only CORGI-registered engineers may carry out work on gas appliances. The Health and Safety Executive is looking into that matter in the context of its review.
In Committee, hon. Members expressed concern about the loss of expertise that may result from the fragmentation of repair work. Through working together

and sharing experiences, British Gas engineers have been able to identify potentially dangerous design faults and installation problems and report them to manufacturers when necessary. That good feature will probably be lost. Their combined pool of experience has been valuable and the potential loss of that exchange of information is worrying.
The Health and Safety Commission recognises that problem in its safety framework document and proposes that the Health and Safety Executive discuss with the industry and other parties arrangements for effective investigation into incidents downstream of the meter and for the dissemination of lessons learnt, such as on design faults in appliances.
What I have said shows that much more work will be placed on the Health and Safety Executive as a result of the Bill and how much the Bill's safety aspects depend for their implementation on the HSE's ability to cope with that new work. Opposition Members have consistently pressed the Government to provide additional funding for the Health and Safety Executive, to help it to carry out its responsibilities.
I understand from a letter that was left for me on the board this afternoon that the Minister proposes to provide more than £2.5 million to enable the HSE to carry out that work. The caveat is that that sum is for only three years. While I welcome the fact that the Government have come forward with that sum, which is warranted and necessary, I am concerned about what will happen when it runs out after three years. Will the Health and Safety Executive be forced to cut back or will the Government provide further funding? I hope that the Minister will address that matter when he responds.
I hope that the right hon. Gentleman will seriously consider the new clause, which aims to ensure that safety and standards of service are maintained for gas consumers in their own homes. The issues that I mentioned must be addressed, to guarantee that good safety standards are achieved once the Bill is enacted. Not least, the good work of the HSE must continue. I hope that the £2.5 million will not dry up after three years, because we would then have a serious problem. I hope that the right hon. Gentleman will respond to those important points, which are of particular concern to people because of their effect on their homes.

Mr. Eggar: I always listen with particular respect to contributions from the hon. Member for Doncaster, North (Mr. Hughes) on safety. Because of his particular experience in the mining industry, I recognise that safety, of which he has a great deal of knowledge, is close to his heart.
Although the hon. Gentleman would be misguided to put money on whether I would accept new clause 6, I would not have hesitated to do so if I thought that it was necessary to provide a thoroughly safe regime in the new competitive gas market. Clause 2 will insert section 4A(2) in the Gas Act 1986, which places a specific duty on the Secretary of State and the director to consult the HSE on all safety matters and to take into account any advice that it offers. In addition, sections 4A(3) and 4A(4) provide that the director must prepare and lay before the House a memorandum of understanding with the HSE, with the aim of securing co-operation and exchange of information and that, therefore, she must act in accordance with that


memorandum. Those provisions cover the vast bulk of the concerns relating to hon. Members' insistence, quite rightly, that the HSE should be involved effectively.
I welcome the slightly grudging praise for the fact that we have produced the necessary funding for the HSE. It does not go beyond three years because the public expenditure system works on a three-year period. We shall address the needs for the fourth year and so on as they come up in the normal cycle of events.

Mr. Kevin Hughes: The right hon. Gentleman will probably not have to do that, because we shall be in government by then.

Mr. Eggar: Illusions, illusions. I shall allow the hon. Gentleman that little flight of fantasy because I do not want to disappoint him about that at least.
The other matters that the new clause would regulate are dealt with in existing regulations, in particular, the Gas Safety (Installation and Use) Regulations 1994. They require that only competent persons may do work on any gas fitting. That definition of gas fitting includes all appliances and pipe work downstream of the meter and the meter itself. In effect, the regulations mean that the people who do that work must be members of CORGI. Under the Bill, responsibility for safety upstream of the meter lies with the public gas transporter. At present, that operates under the general provisions of the Health and Safety at Work, etc. Act 1974. The HSE is, however, currently preparing draft regulations on more explicit rules in relation to gas pipelines.

Mr. Clapham: What steps has the Minister taken to ensure that there is a national register of CORGI-qualified engineers? Many hon. Members know of cases that have caused great concern, because engineers who were not CORGI qualified fitted installations at people's homes. Local authorities, which are particularly relevant because of their housing stock, have no access to a national register to see whether a man contracted by them is CORGI qualified.

Mr. Eggar: That matter was mentioned in Committee, and there is anxiety about it. The HSE has responsibility for that, as one would expect. It is important that the independent agency, the tripartite body under the HSE, looks after those matters. It is reviewing the CORGI scheme at present, and I am sure that it will take into account the anxieties that were expressed by the hon. Gentleman and other hon. Members.
In other words, I am convinced that the arrangements that we propose will meet the necessary requirements for safety. That is not only my opinion but that of the HSE. I wish to repeat, for the record, that we regard safety as paramount, for all the reasons mentioned by Opposition Members. We shall not compromise on that. We believe that the present systems and the present proposals in the Bill strike the right balance and will go as far as it is humanly possible to go to achieve the right type of safety regulation in that important industry.

Mr. Nigel Griffiths: My hon. Friend the Member for Doncaster, North (Mr. Hughes) speaks with great feeling on this subject, and he made a forceful case. The Minister has not reassured us satisfactorily, so we are especially keen to ensure that the other place has a chance to consider the issue, as it often does, in a less politicised atmosphere.
I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

Clause 1

GENERAL DUTIES UNDER 1986 ACT

Mr. O'Neill: I beg to move amendment No. 45, in page 2, line 19, at end insert—

'(2A) The Director, in performing his duty under subsection (2)(c) above shall—

(a) have regard to official estimates of the amount of discovered and recoverable reserves of gas, from onshore and on the United Kingdom Continental Shelf;
(b) have regard to the target reductions in carbon dioxide emissions agreed at the United Nations Conference on Environment and Development, held at Rio de Janeiro in June 1992;
(c) in conjunction with the Secretary of State, support an energy savings trust for the promotion and monitoring of energy efficiency.'.

Madam Deputy Speaker (Dame Janet Fookes): With this, it will be convenient to discuss amendment No. 51, in clause 8, page 12, line 41, at end add—
'(3) Standard conditions for gas suppliers shall included a duty on licence holders to ensure that details of how to obtain free energy efficiency, bill payment and gas appliance servicing advice is clearly displayed on all written material produced by a gas supplier for use by its customers.'.

Mr. O'Neill: The two amendments were in some respects mentioned in Committee, when we discussed matters relating to energy efficiency and conservation. We considered that it would be useful to bring the matter back to the House.
We realise that the hour is somewhat against us, but we want our responsibility for conservation matters and energy efficiency to be more explicitly expressed than the legislation does. It is important that the Director General of Gas Supply has regard to the amount of recoverable reserves of gas offshore and onshore.
The figures on gas reserves are produced annually in the Brown Book. They appear in several categories: proven, probable, proven plus probable, possible and then a maximum. We can sum up the position briefly in respect of gas reserves. The consensus is that between 20 and 35 years' supply of gas is available to us.
It is often said that, in the past 20 years, people have always assumed that there was only 20 years' supply left. That assumption has been due partly to the ingenuity of explorers and partly to the efficiency of companies in extracting gas, but we cannot always assume that there will be an infinite supply of a finite resource simply because of what has happened in the past 20 years. We therefore consider it important that the director general take account of those reserves of gas when advising on specific schemes or when considering systems of generation and the like.
Recently, in the case of electricity, when insufficient attention was given to the construction of gas-fired power stations, some of our coal reserves were lost to the extent that, when certain power stations that depended on specific coal mines closed, the mines in turn closed and we were denied access to supplies of coal. There is a link between the regulatory function and the conservation function. We would like to think that the director general


would have an explicit duty to take account of the estimates that are produced annually in what has become known as the Brown Book.
There is also the environmental consideration required of us by the Rio summit. We are committed to reducing our emissions of carbon dioxide. One of the major factors in the production of carbon dioxide is the pattern of our energy consumption. It would be appropriate for the director general to take account of the success or otherwise of our attempts to meet our internationally agreed targets for emissions.
9.30 pm
The issue of most basic concern to energy consumers in the United Kingdom is probably the establishment of an Energy Saving Trust that has some legislative basis. At present, the Energy Saving Trust exists in a sort of vacuum. It has been created and is the recipient of moneys, but it does not have the proper status that it merits. The amendment is an attempt—perhaps not a wholly adequate attempt—to give proper legislative recognition to the trust.
It is important to have a national agency that gives leadership on the promotion and monitoring of energy efficiency. If we were to have a competitive market and prices were to fall, it would matter little to those who did not have proper access to information about energy efficiency. We know from the experience of many of our constituents that living in draughty houses that are not properly insulated means that much of the money that residents lay out on electricity bills follows the heat out of the windows into the cold and the money is wasted. It is vital that the Energy Saving Trust enjoys enhanced status, which is why we have referred to such a body in the amendment. There is a clear link between the director general's responsibility for energy efficiency and the trust's work.
Amendment No. 51 states that, in the standard conditions for gas suppliers, the licence holders should be required to provide information on energy efficiency, bill payment and gas appliance servicing advice. That information should be available and should be included in all written materials. We know that certain steps have been taken. British Gas has often given information and sources of information, but that information should be in the standard conditions and should be part and parcel of the companies' responsibility, even if they themselves do not provide that information. It could be argued that, if they do not provide the information, that is all the more reason why organisations such as the Energy Saving Trust and neighbourhood energy action should be drawn to the attention of gas consumers.
Energy efficiency and conservation measures should lie at the heart of the new energy market which is developing. It is not enough merely to deal with matters of price. We should be considering environmental considerations and issues involving energy efficiency—one of the best ways of improving our constituents' quality of life.
I am happy to propose the two amendments in the hope that the Minister will give greater weight to the energy efficiency and conservation responsibilities that he carries, but that really should be shared between him and the director general and her staff.

Mr. Eggar: The director general and my right hon. Friend the Secretary of State already have a duty to exercise their functions in the manner that is best calculated to promote the efficient use of gas. The director general also has a specific power to set standards of performance for gas suppliers in connection with the promotion of the efficient use of gas. The licence also sets out minimum requirements for the provision of energy efficiency advice to consumers.
We believe, as distinct from Opposition Members, that the introduction of competition will itself provide a spur to the promotion of energy efficiency, because different suppliers will want to supply gas in the most appropriate way and many consumers will want to buy that gas in an energy-efficient mode; in other words, suppliers will be competing to supply warm houses as against merely therms of gas.
On the specific points that have been raised, the United Kingdom CS point, or the reserve, is fine. In practical terms, the effect of the amendment would be completely to disregard energy efficiency, because gas reserves have gone up year on year. Gas discovered on a proven basis has exceeded gas consumed. We do not believe, therefore, that it is an appropriate factor that the regulator should take into account.
The hon. Gentleman referred to the Energy Saving Trust. He did not say that my right hon. Friend the Secretary of State for the Environment announced last week that his Department was making available an additional £25 million a year to the Energy Saving Trust to promote energy-efficient measures. Had he focused on that, he would have welcomed that move.

Mr. Clapham: I am grateful to the Minister for giving way. He referred earlier to the fact that the director general should not have to concern herself with gas reserves. Given that we are using more gas for energy production, and that by the end of century we are likely to be using 40 million tonnes of coal equivalent, will there not be more pressure on prices and, therefore, should the director general not be concerned with these matters?

Mr. Eggar: It is true that the domestic consumption of gas is rising; so is the amount of success with gas discoveries. Imports of gas are near their lowest level since we first started importing from Norway. Gas prices are probably at their lowest level in real terms, but we cannot be confident that will continue.
The hon. Member for Clackmannan (Mr. O'Neill) raised the issue of what would be disclosed on bills for domestic customers. The list of disclosures required is long, going far beyond what British Gas is required to do or does as a matter of practice. However, it is reasonable to expect that when gas suppliers are competing for customers they will wish to make people fully aware of the services that they offer. It is best to leave it up to them to decide the best way to do that. For those reasons, I feel unable to accept the amendment.

Mr. O'Neill: The Minister has had a brief run around the track, and we recognise the points that he has made. We feel


that there is some complacency about the view that, simply because we are getting more gas into Britain and because prices are cheaper, somehow the regulator should not take account of the levels of supply and the reserves.
We do not wish at this stage to push the amendment to a vote. We raised the matter in Committee. Everyone in the House will be grateful that money is now being put in the way of the Energy Saving Trust, because we recognise that it is an important body. I hope that the legitimacy that the funding will afford the trust will be only the first stage of putting it on a proper footing.
The Government have spent a lot of time attacking quangos, although they have created many of them. I am not sure whether the Energy Saving Trust is a quango in the true sense of the word, because it does not have a statutory basis. Although it is vaguely answerable to the Secretary of State for the Environment, a more appropriate person for that role might be the President of the Board of Trade, with his responsibility for trade and industry. However, I do not think that we need to debate that matter this evening. To avoid any further temptation to do so, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Clause 5

LICENSING OF PUBLIC GAS TRANSPORTERS

Amendments made: No. 1, in page 5, leave out lines 13 and 14 and insert—
'(b) the conveyance of gas through pipes which—

(i) are situated in an authorised area of his; or
(ii) are situated in an area which was an authorised area of his, or an authorised area of a previous holder of the licence, and were so situated at a time when it was such an area; or'.

No. 2, in page 7, line 1, at end insert—
'() references to the carrying on of activities authorised by a licence under this section shall be construed without regard to any exception contained in Schedule 2A to this Act;'.—[Mr. Eggar.]

Clause 6

LICENSING OF GAS SUPPLIERS AND GAS SHIPPERS

Mr. O'Neill: I beg to move amendment No. 49, in page 8, line 29, at end insert—
'(2A) In the period before the relevant date the Director shall:
(a) monitor the effect of the granting of a licence under subsections (3) to (5) below on such persons as in his opinion are appropriate; and
(b) consult such persons and organisations as appear to him to represent the interests of persons affected by the granting of a licence under those subsections, and such other persons as he considers appropriate, on the effects of granting such a licence.
(2B) No licence shall be granted under section 7A(1)(a) of the 1986 Act (other than by virtue of subsections (3) to (5) below) until the Secretary of State has laid a report before both Houses of Parliament indicating—

(i) the results of the monitoring and responses to the consultation referred to in subsection (2A) above;
(ii) the effect, in his opinion and in the opinion of the Director, of the granting of licences under subsections (3) to (5) below and Schedule 5 to this Act in the period before the relevant date; and
(iii) the reasons why, in his opinion, it is in the interests of all persons affected that licences under section 7A(1)(a) of the 1986 Act should be granted.'.

In some respects, the amendment is one of the most pertinent with which we shall deal because it relates to what has become known as the pilot areas—those areas in which the competitive gas market will be tested. The amendment is an attempt to require the director general to monitor the effect of granting a licence and to consult organisations and people who appear to represent the interests of the persons affected by the granting of the licence. The amendment also states that no licence shall be granted until a report has been laid before both Houses of Parliament indicating the result of the monitoring and the responses to the consultation.

The only other example of a deregulated gas market comes from Canada and it must be said that the Canadian experience was not wholly successful. As a consequence, many people are anxious about the exercise, and that is evidenced by the Government's testing the water. We welcome the attempt to choose areas in the south-west of England that are among the most controversial. If the exercise is to have any worth, it is vital not only that the pilot areas are studied properly but that the House has the right to pass judgment on whether the scheme should proceed once the pilot has been completed.

Some of my hon. Friends may take the view that it does not really matter because, by the time the reports are completed, there will be another Government and we will take the decisions about those matters. That is as may be, but we must ensure that proper monitoring techniques are put in place and that the director general is able to take full account of them. As I have said, the experience in other countries has not been wholly satisfactory. The Canadian experience caused great difficulty, but perhaps that will not be replicated here with such ferocity in view of the differing climatic conditions in that country.

Nevertheless, the experience could create anxiety among communities who, even now, are extremely vulnerable. Therefore, we believe it is important to ensure that proper monitoring takes place and that the monitoring is reported correctly. At the end of the day, the House should be able to pass judgment on the findings of the report and decide whether we wish to proceed to grant the rest of the licences across the United Kingdom. That approach has wide support. A number of consumer groups—containing people who are in touch with gas consumers—have heard of and are conscious of the problems that could arise; therefore, it is essential that a proper assessment is made of the monitoring process.

I can do no more than quote paragraph 60 of the Select Committee on Trade and Industry report, which states:
It would be pointless to have a transitional period unless there is a full assessment of its consequences and wide consultation, including parliamentary scrutiny, before further steps are taken.
That is what the amendment would achieve. We want that in relation to the designated pilot areas. That is why the House should have the right to stop and take stock before it takes this big step for the whole British energy market. For those reasons, we are happy to table amendment No. 49.

Mr. Harvey: I support the amendment. I moved one along similar lines in Committee. The amendment is a welcome, if overdue, innovation in Government practice that the .Government have chosen to run a pilot scheme.


If they had done so in relation to many other areas of legislation, it would have saved them and the public a great deal of pain.
It would serve the Government's purpose far more comprehensively if, having taken the decision to run a pilot scheme, their assessment criteria went far wider than simply technical aspects, which seem to be the scope of their intention to date. The amendment's proposal of giving both Houses a chance to scrutinise the pilot scheme and to assess it is much to be applauded.

Mr. Eggar: The Government have previously made it clear that the phased transition to a nationwide competitive system will provide an opportunity to test the necessary technical and administrative systems for the balancing of gas and the transfer of customers. That is essentially a technical operation. That is why we are starting with an area of 500,000 customers in the south-west and moving up to one of 2 million. We want to find out whether additional problems exist as we expand and go nationwide.
The purpose of the pilot scheme and then of the expanded pilot is to allow British Gas TransCo and competing gas suppliers to iron out any problems with their systems while they are still operating on a relatively small scale. That relates particularly to computer and other such systems.
We must be clear, however, that the pilot is not an attempt to test the principle of whether competition will go ahead. That decision has already been made, on Second Reading. An approach that left the question of principle in doubt would cast a shadow of uncertainty over the industry, both onshore and in the North sea. That would be in no one's interests because it might mean that suppliers would not make the investment needed for competition to be a success. The scheme must be planned with a degree of certainty.
In particular, such an approach would make the necessary adjustment of North sea supply positions and contracts impossibly unpredictable. It would be wrong to try to reopen the principle of competition through what I would call the back door, as it would bring in considerable uncertainty, which is the last thing that we need in terms of planning large investments.
Of course, the director general will clearly wish to monitor the progress of competition and expect to seek feedback from consumers and suppliers of their experience of competition during the transitional phase. That was one of the criteria that we asked the areas to comment on when they applied to be pilots. If that monitoring showed that licence conditions were not having the desired effect, the director general could make proposals to change them. The on-going monitoring process will enable Ministers and the director general to report appropriately to the House and to the other place about progress. It is certainly my intention to do just that.

Mr. O'Neill: That answer was wholly unsatisfactory. The Minister said that ultimately it is all down to computers and a few pipes, and that if the report is disastrous only a little fine tuning will be required and everything can be changed. We are discussing the big step of reconstructing the energy market and a potentially

dangerous fuel, using a number of companies untested in the UK, and many untested worldwide, in the selling of gas.
We are told that if the House had the right to veto further developments until it was satisfied that necessary changes and improvements had been made, that would create such a shadow of uncertainty that there would be fear of investing and an adjustment to North sea contracts. I imagine that we will be debating amendments Nos. 40 and 41 to schedule 5 tomorrow, relating to the consequences of changes to North sea contracts. The Minister will be playing a different tune then.
If monitoring is not undertaken effectively, reports are not presented in the appropriate way and the House is not given the opportunity to pass judgment, the deregulation of the gas market could founder. If the proposal is to survive and is to command the respect and support of both sides of the House and, more important, command consumer confidence, it is essential that monitoring in pilot areas assumes greater significance than simply suggesting that the tweaking of a computer or changing a piping system will resolve all problems.
This matter is of the utmost importance and I am not prepared to withdraw the amendment. We will press the amendment to a Division because, in essence, the House has the right to be able to say, in a matter which is in many respects a leap in the dark, that if we get it wrong with the pilot projects, the proposal should not proceed. The amendment is of sufficient significance for the House to have the opportunity to vote on it. I urge my hon. Friends to join me in the Lobby to support it.

Question put, That the amendment be made:—

The House divided: Ayes 229, Noes 269.

Division No. 147]
[9.53 pm


AYES


Abbott, Ms Diane
Carlile, Alexander (Montgomery)


Ainsworth, Robert (Cov'try NE)
Chisholm, Malcolm


Allen, Graham
Clapham, Michael


Alton, David
Clark, Dr David (South Shields)


Anderson, Donald (Swansea E)
Clarke, Eric (Midlothian)


Anderson, Ms Janet (Ros'dale)
Clarke, Tom (Monklands W)


Armstrong, Hilary
Clelland, David


Austin-Walker, John
Clwyd, Mrs Ann


Banks, Tony (Newham NW)
Coffey, Ann


Barnes, Harry
Cohen, Harry


Barron, Kevin
Connarty, Michael


Battle, John
Cook, Frank (Stockton N)


Beckett, Rt Hon Margaret
Cook, Robin (Livingston)


Bell, Stuart
Corbett, Robin


Benn, Rt Hon Tony
Cousins, Jim


Bennett, Andrew F
Cummings, John


Benton, Joe
Cunliffe, Lawrence


Bermingham, Gerald
Cunningham, Jim (Covy SE)


Berry, Roger
Cunningham, Rt Hon Dr John


Betts, Clive
Dafis, Cynog


Blunkett, David
Dalyell, Tam


Boateng, Paul
Davidson, Ian


Bradley, Keith
Davies, Bryan (Oldham C'tral)


Bray, Dr Jeremy
Davies, Ron (Caerphilly)


Brown, Gordon (Dunfermline E)
Denham, John


Brown, N (N'c'tle upon Tyne E)
Dewar, Donald


Burden, Richard
Dixon, Don


Byers, Stephen
Dobson, Frank


Caborn, Richard
Donohoe, Brian H


Callaghan, Jim
Dowd, Jim


Campbell, Mrs Anne (C'bridge)
Dunnachie, Jimmy


Campbell, Menzies (Fife NE)
Dunwoody, Mrs Gwyneth


Cann, Jamie
Eagle, Ms Angela






Eastham, Ken
McNamara, Kevin


Enright, Derek
MacShane, Denis


Etherington, Bill
Madden, Max


Fatchett Derek
Mahon, Alice


Faulds, Andrew
Mandelson, Peter


Field, Frank (Birkenhead)
Marek, Dr John


Fisher, Mark
Martlew, Eric


Flynn, Paul
Meacher, Michael


Foster, Rt Hon Derek
Meale, Alan


Foster, Don (Bath)
Michael, Alun


Fraser, John
Michie, Bill (Sheffield Heeley)


Fyfe, Maria
Milburn, Alan


Galbraith, Sam
Miller, Andrew


Galloway, George
Mitchell, Austin (Gt Grimsby)


Gapes, Mike
Moonie, Dr Lewis


Garrett, John
Morgan, Rhodri


Gerrard, Neil
Morley, Elliot


Gilbert, Rt Hon Dr John
Morris, Rt Hon Alfred


Godman, Dr Norman A
Morris, Estelle (B'ham Yardley)


Godsiff, Roger
Mowlam, Marjorie


Gdding, Mrs Llin
Mudie, George


Gordon, Mildred
Mullin, Chris


Graham, Thomas
Murphy, Paul


Grant, Bernie (Tottenham)
Oakes, Rt Hon Gordon


Griffiths, Nigel (Edinburgh S)
O'Brien, Mike (N W'kshire)


Griffiths, Win (Bridgend)
O'Brien, William (Normanton)


Grocott, Bruce
O'Hara, Edward


Gunnell, John
Olner, Bill


Hain, Peter
O'Neill, Martin


Hall, Mike
Orme, Rt Hon Stanley


Harman, Ms Harriet
Paisley, The Reverend Ian


Harvey, Nick
Patchett, Terry


Heppell, John
Pearson, Ian


Hill, Keith (Streatham)
Pendry, Tom


Hinchliffe, David
Pike, Peter L


Hodge, Margaret
Pope, Greg


Hoey, Kate
Powell, Ray (Ogmore)


Hogg, Norman (Cumbernauld)
Prentice, Bridget (Lew'm E)


Hood, Jimmy
Prentice, Gordon (Pendle)


Hoon, Geoffrey
Primarolo, Dawn


Howarth, George (Knowsley North)
Purchase, Ken


Howells, Dr. Kim (Pontypridd)
Quin, Ms Joyce


Hoyle, Doug
Radice, Giles


Hughes, Kevin (Doncaster N)
Randall, Stuart


Hughes, Robert (Aberdeen N)
Raynsford, Nick


Hughes, Roy (Newport E)
Reid, Dr John


Hutton, John
Rendel, David


Illsley, Eric
Robertson, George (Hamilton)


Ingram, Adam
Robinson, Geoffrey (Co'try NW)


Jackson, Glenda (H'stead)
Robinson, Peter (Belfast E)


Jackson, Helen (Shef'ld, H)
Rooker, Jeff


Jamieson, David
Rooney, Terry


Janner, Greville
Ross, Ernie (Dundee W)


Jones, Barry (Alyn and D'side)
Rowlands, Ted


Jones, Lynne (B'ham S O)
Ruddock, Joan


Jones, Martyn (Clwyd, SW)
Sedgemore, Brian


Jowell, Tessa
Sheerman, Barry


Kaufman, Rt Hon Gerald
Sheldon, Rt Hon Robert


Kennedy, Charles (Ross.C&S)
Shore, Rt Hon Peter


Kennedy, Jane (Lpool Brdgn)
Short, Clare


Khabra, Piara S
Simpson, Alan


Kilfoyle, Peter
Skinner, Dennis


Lestor, Joan (Eccles)
Smith, Chris (Isl'ton S & F'sbury)


Lewis, Terry
Smith, Llew (Blaenau Gwent)


Litherland, Robert
Snape, Peter


Livingstone, Ken
Soley, Clive


Lloyd, Tony (Stretford)
Spearing, Nigel


Lynne, Ms Liz
Squire, Rachel (Dunfermline W)


McAvoy, Thomas
Steinberg, Gerry


McCartney, Ian
Stevenson, George


McCrea, The Reverend William
Sutcliffe, Gerry


Macdonald, Calum
Taylor, Mrs Ann (Dewsbury)


McFall, John
Taylor, Matthew (Truro)


Mackinlay, Andrew
Timms, Stephen


McLeish, Henry
Tipping, Paddy


McMaster, Gordon
Touhig, Don





Vaz, Keith
Worthington, Tony


Walker, Rt Hon Sir Harold
Wray, Jimmy


Watson, Mike
Wright, Dr Tony


Wigley, Dafydd
Young, David (Bolton SE)


Williams, Rt Hon Alan (SW'n W)



Williams, Alan W (Carmarthen)
Tellers for the Ayes:


Winnick, David
Mr. Dennis Turner and


Wise, Audrey
Mr. Jon Owen Jones.




NOES


Ainsworth, Peter (East Surrey)
Dunn, Bob


Aitken, Rt Hon Jonathan
Durant, Sir Anthony


Alison, Rt Hon Michael (Selby)
Dykes, Hugh


Allason, Rupert (Torbay)
Eggar, Rt Hon Tim


Amess, David
Emery, Rt Hon Sir Peter


Arbuthnot, James
Evans, David (Welwyn Hatfield)


Arnold, Jacques (Gravesham)
Evans, Jonathan (Brecon)


Arnold, Sir Thomas (Hazel Grv)
Evans, Nigel (Ribble Valley)


Ashby, David
Evans, Roger (Monmouth)


Atkins, Robert
Evennett, David


Atkinson, David (Bour'mouth E)
Faber, David


Atkinson, Peter (Hexham)
Fabricant, Michael


Baker, Rt Hon Kenneth (Mole V)
Fenner, Dame Peggy


Baker, Nicholas (North Dorset)
Field, Barry (Isle of Wight)


Baldry, Tony
Fishburn, Dudley


Banks, Matthew (Southport)
Forman, Nigel


Banks, Robert (Harrogate)
Forsyth, Rt Hon Michael (Stirling)


Bates, Michael
Forth, Eric


Batiste, Spencer
Fowler, Rt Hon Sir Norman


Bellingham, Henry
Fox, Sir Marcus (Shipley)


Bendall, Vivian
Freeman, Rt Hon Roger


Beresford, Sir Paul
French, Douglas


Biffen, Rt Hon John
Gale, Roger


Booth, Hartley
Gardiner, Sir George


Boswell, Tim
Garel-Jones, Rt Hon Tristan


Bottomley, Peter (Eltham)
Garnier, Edward


Bottomley, Rt Hon Virginia
Gill, Christopher


Bowis, John
Gillan, Cheryl


Boyson, Rt Hon Sir Rhodes
Goodlad, Rt Hon Alastair


Brandreth, Gyles
Gorman, Mrs Teresa


Brazier, Julian
Gorst, Sir John


Bright Sir Graham
Grant,Sir A (SW Cambs)


Brooke, Rt Hon Peter
Greenway, Harry (Ealing N)


Brown, M (Brigg & Cl'thorpes)
Greenway, John (Ryedale)


Browning, Mrs Angela
Griffiths, Peter (Portsmouth, N)


Bruce, Ian (Dorset)
Grylls, Sir Michael


Budgen, Nicholas
Gummer, Rt Hon John Selwyn


Burns, Simon
Hague, William


Burt, Alistair
Hamilton, Neil (Tatton)


Butcher, John
Hampson, Dr Keith


Butler, Peter
Hannam, Sir John


Butterfill, John
Hargreaves, Andrew


Carlisle, Sir Kenneth (Lincoln)
Harris, David


Carrington, Matthew
Haselhurst, Alan


Carttiss, Michael
Hawkins, Nick


Cash, William
Hayes, Jerry


Channon, Rt Hon Paul
Heald, Oliver


Clappison, James
Heath, Rt Hon Sir Edward


Clark, Dr Michael (Rochford)
Heathcoat-Amory, David


Clifton-Brown, Geoffrey
Hendry, Charles


Coe, Sebastian
Hicks, Robert


Conway, Derek
Hill, James (Southampton Test)


Coombs, Simon (Swindon)
Hogg, Rt Hon Douglas (G'tham)


Cope, Rt Hon Sir John
Horam, John


Cormack, Sir Patrick
Hordern, Rt Hon Sir Peter


Couchman, James
Howard, Rt Hon Michael


Cran, James
Howarth, Alan (Strat'rd-on-A)


Currie, Mrs Edwina (S D'by'ire)
Howell, Rt Hon David (G'dford)


Curry, David (Skipton & Ripon)
Howell, Sir Ralph (N Norfolk)


Day, Stephen
Hughes, Robert G (Harrow W)


Deva, Nirj Joseph
Hunt, Sir John (Ravensbourne)


Dorrell, Rt Hon Stephen
Hunter, Andrew


Douglas-Hamilton, Lord James
Hurd, Rt Hon Douglas


Dover, Den
Jack, Michael


Duncan, Alan
Jackson, Robert (Wantage)


Duncan-Smith, Iain
Jenkin, Bernard






Jessel, Toby
Robinson, Mark (Somerton)


Johnson Smith, Sir Geoffrey
Roe, Mrs Marion (Broxbourne)


Jones, Gwilym (Cardiff N)
Rowe, Andrew (Mid Kent)


Jones, Robert B (W Hertfdshr)
Rumbold, Rt Hon Dame Angela


Jopling, Rt Hon Michael
Ryder, Rt Hon Richard


Kellett-Bowman, Dame Elaine
Sackville, Tom


Kirkhope, Timothy
Sainsbury, Rt Hon Sir Timothy


Knapman, Roger
Scott, Rt Hon Sir Nicholas


Knight, Mrs Angela (Erewash)
Shaw, David (Dover)


Knight, Greg (Derby N)
Shephard, Rt Hon Gillian


Kynoch, George (Kincardine)
Shepherd, Colin (Hereford)


Lait, Mrs Jacqui
Shepherd, Richard (Aldridge)


Lamont, Rt Hon Norman
Shersby, Michael


Lang, Rt Hon Ian
Sims, Roger


Lawrence, Sir Ivan
Skeet, Sir Trevor


Legg, Barry
Smith, Tim (Beaconsfield)


Leigh, Edward
Soames, Nicholas


Lennox-Boyd, Sir Mark
Speed, Sir Keith


Lester, Jim (Broxtowe)
Spencer, Sir Derek


Lidington, David
Spicer, Michael (S Worcs)


Lightbown, David
Spink, Dr Robert


Lilley, Rt Hon Peter
Spring, Richard


Lloyd, Rt Hon Sir Peter (Fareham)
Sproat, Iain


Lord, Michael
Squire, Robin (Hornchurch)


Lyell, Rt Hon Sir Nicholas
Stanley, Rt Hon Sir John


MacGregor, Rt Hon John
Steen, Anthony


MacKay, Andrew
Stephen, Michael


Maclean, David
Stern, Michael


McLoughlin, Patrick
Stewart, Allan


McNair-Wilson, Sir Patrick
Streeter, Gary


Madel, Sir David
Sumberg, David


Maitland, Lady Olga
Sykes, John


Major, Rt Hon John
Tapsell, Sir Peter


Malone, Gerald
Taylor, Ian (Esher)


Mans, Keith
Taylor, John M (Solihull)


Marlow, Tony
Taylor, Sir Teddy (Southend, E)


Marshall, Sir Michael (Arundel)
Temple-Morris, Peter


Martin, David (Portsmouth S)
Thomason, Roy


Mates, Michael
Thompson, Sir Donald (C'er V)


Mawhinney, Rt Hon Dr Brian
Thompson, Patrick (Norwich N)


Mellor, Rt Hon David
Thornton, Sir Malcolm


Merchant, Piers
Thurnham, Peter


Mills, Iain
Townend, John (Bridlington)


Mitchell, Andrew (Gedling)
Townsend, Cyril D (Bexl'yh'th)


Mitchell, Sir David (NW Hants)
Tracey, Richard


Moate, Sir Roger
Trend, Michael


Monro, Sir Hector
Twinn, Dr Ian


Montgomery, Sir Fergus
Vaughan, Sir Gerard


Moss, Malcolm
Viggers, Peter


Needham, Rt Hon Richard
Waldegrave, Rt Hon William


Nelson, Anthony
Walden, George


Newton, Rt Hon Tony
Walker, Bill


Nicholls, Patrick
Waller, Gary


Nicholson, David (Taunton)
Ward, John


Nicholson, Emma (Devon West)
Wardle, Charles (Bexhill)


Norris, Steve
Waterson, Nigel


Onslow, Rt Hon Sir Cranley
Watts, John


Ottaway, Richard
Wells, Bowen


Patnick, Sir Irvine
Whitney, Ray


Pattie, Rt Hon Sir Geoffrey
Whittingdale, John


Pawsey, James
Widdecombe, Ann


Peacock, Mrs Elizabeth
Willetts, David


Pickles, Eric
Winterton, Nicholas (Macc'fld)


Porter, Barry (Wirral S)
Wolfson, Mark


Porter, David (Waveney)
Wood, Timothy


Portillo, Rt Hon Michael
Yeo, Tim


Powell, William (Corby)
Young, Rt Hon Sir George


Redwood, Rt Hon John
Tellers for the Noes:


Renton, Rt Hon Tim
Mr. Sydney Chapman and


Robathan, Andrew
Dr. Liam Fox.

Question accordingly negatived.

Further consideration adjourned.—[Mr. Conway]

Bill, as amended (in the Standing Committee), to be further considered tomorrow.

Mr. Gerald Bermingham: On a point of order, Mr. Deputy Speaker. Some days ago, I tabled a series of questions to the Home Secretary about a contract issued in respect of a computer for the probation service. Those questions were duly accepted, and are listed as Nos. 186, 198, 209 and 231 on the Order Paper today.
It is now after 10 o'clock and, in accordance with the normal conventions, those questions which were due for answer today should have been notified to me either by way of a written answer or by being tabled for the press. Neither has happened. It is clear that the answers to those questions will be in Hansard tomorrow, and it is also clear that the Home Office—officials of which I have been trying to contact all night—has deliberately avoided answering the questions on the named day. The reason it has done so is undoubtedly suspicious. We are talking here about a £20 million computer contract which may well be—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. I think that I can help the hon. Gentleman. He must take the matter up with the Minister concerned, as it is not a matter for the Chair at this stage.

Mr. Bermingham: Further to that point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I have ruled on the hon. Gentleman's point of order.

Mr. Bermingham: rose—

Mr. Deputy Speaker: Order. I have ruled on it, and there can be no further points of order on that matter.

Mr. Bermingham: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Is it the same point of order?

Mr. Bermingham: No. Several times in the past, the Chair has ruled that it is the convention that Members—

Mr. Deputy Speaker: Order. The Chair has just ruled, and there can be no further points of order on that subject.

Orders of the Day — Legal Services

The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): I beg to move,
That the draft Conditional Fee Agreements Order 1995, which was laid before this House on 20th April, be approved.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I understand that with this it will be convenient to discuss the following motion:
That the draft Conditional Fee Agreements Regulations 1995, which were laid before this House on 20th April, be approved.

Mr. Taylor: The order and regulations will bring into force the conditional fee provisions of section 58 of the Courts and Legal Services Act 1990. The scheme will greatly widen access to justice by enabling lawyers to act on a "no win, no fee" basis. To reflect the risk that that entails, lawyers will be able to charge an uplift on their normal fees if the litigation is successful. The Courts and Legal Services Act provides that the Lord Chancellor, after consultation with the designated judges and the profession, should prescribe the types of proceedings in which conditional fee agreements would be allowable, the maximum percentage uplift that would be permitted and any other requirements that he considers necessary. Those matters are set out in the draft order and regulations.

Mr. Alex Carlile: The Lord Chancellor, with his great expertise in Scottish law, will no doubt have considered the success of similar arrangements that have been available in Scotland for some time. What has been the uptake of those arrangements in Scotland, and how successful have they been?

Mr. Taylor: I will come back to that matter, but I can say that an uplift of 100 per cent. is exactly what has been allowed since 1992 under the Scottish speculative fee scheme. [Interruption.] I will answer at the end of the debate.
Personal injury litigation would seem particularly well suited to conditional fee agreements because although the uplift or "success fee", as it is often called, is not directly related to the amount of damages recovered, the fact that there will be a monetary award in successful cases will give the litigant the means to pay his lawyer's fees.
In the light of representations made during the consultation exercise to which I have referred, the Lord Chancellor decided to include insolvency proceedings and cases before the European Commission of Human Rights and the European Court of Human Rights. The Lord Chancellor has set the maximum uplift at 100 per cent. That will encourage lawyers to accept cases with a 50:50 chance of success which, if the uplift were lower, they might not be inclined to take. The whole purpose of the new arrangement is to extend access to justice.
I consider that the proposals will prove a valuable addition to the judicial system in this country, and I commend them to the House.

Mr. Paul Boateng: The Minister's failure to respond to the query of my—he is not an hon. Friend yet—the hon. and learned Member for Montgomery (Mr. Carlile) speaks volumes. Was his reticence due to a lack of information on his part? Will it

soon be remedied by a flurry of notes and interest from the silent ones, or was it unlikely and, in my respectful submission, unhelpful reticence on the point? Perhaps the response will come any minute now, so I shall of course give way to the hon. Gentleman.
Perhaps the Minister's reticence is due to the fact that in Scotland the self-same regulations—or at least regulations of a sort upon which the measures are based—have not produced any appreciable benefit to the consumer of legal services. It is by those criteria that the Opposition judge the measures. What will be the benefit not to the lawyer but to the consumer of legal services? On that issue, the jury is out.

Mr. Taylor: Actually, it is not. I have a letter dated 11 May from Meriel Thorne, the parliamentary officer of the Consumers Association. She states:
As we made clear in our response to the various consultations from the Lord Chancellor's Department, we warmly support this provision. We support the new arrangements for the improved choice and access to justice they will provide for the large number of people currently prevented from enforcing their legal rights. We welcome"—
this is the Consumers Association—
the means of support they will offer for those who would otherwise be deterred from pursuing their legal rights by the fear of legal costs.

The Treasurer of Her Majesty's Household (Mr. Greg Knight): Withdraw.

Mr. Boateng: I hear a cry of "Withdraw" from the usually silent one, but I have no intention of doing so. I repeat, the jury remains out, and the Minister's attempt to rely on a specious majority verdict with the numbers made up by the National Consumer Council is not going to work.

Sir Ivan Lawrence: rose—

Mr. Boateng: I shall give way in a moment, but I fancy that the hon. and learned Gentleman will be making his own contribution in due course.
Why is it that, despite his intervention, the Minister has failed to answer the question asked by the hon. and learned Member for Montgomery?

Sir Ivan Lawrence: What is the hon. Gentleman doing talking about juries? The order will not apply to jury trials.

Mr. Boateng: That contribution speaks for itself. Even at this late stage of the evening, one would hope for better from the hon. and learned Gentleman. Still, one lives in hope.
It is not good enough for the Minister to pray in aid the National Consumer Council. He is not alone in having letters from the council—we can all produce and refer to them. The regulations fail to deal with the council's concerns about the particular arrangements for the conditional fees proposed by the Minister and the issue of the 100 per cent. uplift.
The council is not alone in expressing concern about the extent of that uplift. It commends to the Minister that the Law Society should encourage solicitors to put a voluntary cap of 25 per cent. of the total damages as the amount that they take in success fees, even if it is less


than the agreed success fee. Is that something which the Minister will join the National Consumer Council and the Opposition—

Mr. John M. Taylor: At least for the correction of Hansard, I repeat that I am reading a letter of unqualified support not from the National Consumer Council, to which the hon. Gentleman refers, but from the Consumers Association. The record should be clear on that.

Mr. Boateng: I am grateful to the Minister for that because it did surprise me that he should suggest that the consumers spoke with one voice on this issue. He admits by that intervention that the National Consumer Council's doubts about the measures remain, and they remain unanswered by the Minister.
Is the Minister prepared to join the National Consumer Council in calling on the Law Society to encourage solicitors in every way to impose a voluntary cap? Does he think that that is desirable? The Minister remains silent, so we must conclude that he is not prepared to put the authority of his office and that of the Lord Chancellor behind that modest proposal as a way of safeguarding the consumer.

Mr. Edward Garnier: rose—

Mr. Spencer Batiste: rose—

Mr. Boateng: I am glad to see such a flurry of interest from the Conservatives. It is welcome on a matter of such importance. We all look forward to the speeches that they will no doubt make on the issue.
Will the Minister deal with the following matter on behalf of consumers? In 1994, the National Consumer Council's research into client care found communication about costs—even in ordinary arrangements—to be a problem. About one third of privately paying clients surveyed did not receive adequate information about likely costs. Given the greater potential for misunderstanding between client and solicitor over the highly complicated terms of agreement and the variety of possible outcomes envisaged in these regulations, what steps will the Minister undertake to take, here and now, to ensure that the potential for misunderstandings between solicitors and clients is reduced in that regard, as without that Conservative Members and many others will continue to fear the impact of the arrangements on consumers and on their welfare?

Mr. Batiste: I am a little confused by what the hon. Gentleman said. It appeared to be self-contradictory. From his early comments on the Scottish experience, I thought that he was saying that conditional fees should be encouraged, but that they had been relatively unsuccessful in capturing the public imagination in Scotland. Yet, by his subsequent proposal that only a 25 per cent. uplift should be allowed, is he not in effect saying that it is unlikely to be successful anywhere, as few people will be prepared to take the risk at those levels?

Mr. Boateng: There is no contradiction. Our concern—it must be one that is shared by all people of good will—is that every effort should be made to encourage and support arrangements that improve and enhance the consumer's access to justice. We take that as read. These proposals

have been much vaunted by the right hon. Lord Chancellor and, indeed, by the Minister as an important response to the problem of access to justice.

Mr. Garnier: Will the hon. Gentleman give way?

Mr. Boateng: Not at the moment.
The Opposition are pointing out that, in the light of the Scottish experience, it would be wrong for us to see these arrangements as some sort of panacea for the problems that exist in promoting access to justice. Now that the regulations have been laid before the House, our concern is to ensure that every encouragement is given to ensure that they work in the interests of the consumer. Hence the concern about the cap, and a recognition of the role of a voluntary cap in some cases, but also, and importantly, the concern about ensuring that consumers of legal services who enter into such agreements with their solicitors are fully aware of all the implications for their relationship with their solicitor. We regard that as important.

Mr. Garnier: Will the hon. Gentleman give way?

Mr. Boateng: No, not at the moment.
We are anxious to receive assurances from the Minister on a further matter—the potential, which the National Consumer Council has pointed out, for solicitors to exaggerate the difficulties of winning to justify a high success fee, even if it is an open and shut case. Where they can, clients must treat conditional fees like any other business transaction and must be in a position to shop around to get the best deal. That is why we urge the Government to ensure that safeguards are in place for the consumer. As the arrangements are put in place for the first time, we also want the Government to keep them under constant review to ensure that consumers get the best possible deal and to avoid some of the potential dangers that have been identified.
It is important that the Government respond to the concerns about the proposals expressed in the other place and elsewhere by the judiciary. The criticisms of Lord Justice Steyn, Lord Ackner and Lord Simon of Glaisedale in particular require the Government's consideration. I would welcome a sign from the Minister that Lord Steyn's urgings that officials in his Department rethink the proposals have had some effect. It would be wrong of the Minister to ignore the concerns expressed by Lord Steyn, not least the warning that, under the present arrangements, litigants might find all their damages swallowed up in increased fees. Lord Steyn's committee said that the risk applies even if those are increased by only 50 per cent. The risk is that much greater if they are increased by 100 per cent.

Mr. Garnier: I am diffident about interrupting the hon. Gentleman because I know that for some years he was a solicitor and for some little while has been a barrister, but will he tell the House what is the Labour party's policy on that measure? Does it support it or not?

Mr. Boateng: I had hoped that it would be possible to discuss this measure, raising, as we are bound to raise, the concerns on the part of consumers but, at the same time, not ignoring the importance of exploring, by all


reasonable means, the opportunity to give consumers greater access to justice and legal services. I hope that that sets the hon. and learned Gentleman's mind at rest.

Mr. Garnier: indicated dissent.

Mr. Boateng: I do not know whether the hon. and learned Gentleman is unduly exercised by the fact that he may be required to wait a little longer to see whether we divide the House on this issue. If that is his concern, as I suspect it may be, I have no intention whatever of putting him out of his misery. He can wait just a little longer.

Mr. Garnier: rose—

Mr. Boateng: I do not intend to give way to the hon. and learned Gentleman again.

Mr. Garnier: The hon. Gentleman is frightened.

Mr. Boateng: I think not.
Our purpose in ensuring that we had a full debate on the issue on the Floor of the House tonight was to seek from the Minister the reassurances that I have outlined. We feel the need to do that given the absence of reassurances so far. When the Lord Chancellor and the Minister were advised about the concerns expressed by the higher judiciary about the proposals, far from saying that they had rethought the scheme, they expressed their determination to persist with it, come what may. That is not the attitude for which we would have hoped from the Minister and the Lord Chancellor. We can only hope that the Minister will be able to offer us some of the reassurances that we seek.
We also seek some assurances about the Law Society's proposals for insurance. It has apparently proposed a scheme under which some clients, but not all, can protect themselves against paying the legal costs of their opponents if they lose. Lord Steyn has said that such a scheme is of great importance, but the Law Society has been singularly unforthcoming in producing the detail about its provisions that one would want. It is by no means clear whether everyone litigating under the no-win, no-fee arrangements would be able to obtain cover.
Has the Minister's Department met representatives of the Law Society to discuss the scheme? What advice has the Law Society been given about the scheme? Will it cover all those who seek to avail themselves of its benefits? Our decision on whether to divide the House on the proposals will depend upon the Minister's responses to those questions. Hope springs eternal—

Mr. Alex Carlile: They have all gone home.

Mr. Boateng: I am surprised at the hon. and learned Gentleman, whom I sought to support in his earlier humble contribution. It just shows that it would be premature to regard him as a friend. I am surprised that he should make such an unkind remark from a sedentary position, suggesting that all my hon. Friends have gone home. That is far from the truth. Not all of them have—

Mr. Carlile: Just two others are here.

Mr. Boateng: My hon. Friend the Member for Great Grimsby (Mr. Mitchell) has done distinguished service on the matter. If pushed, I can assure the Minister and
Conservative Members that my hon. Friends will come out of the woodwork to do their duty by the consumers of legal services.

Sir Ivan Lawrence: What normally comes out of the woodwork is sap and creepy-crawlies.

Mr. Boateng: We look forward to yet more comments from the hon. and learned Gentleman. I hope that we will be treated to speech from him, because, given his current position, it would be a shame if he did not share his wisdom with a wider audience.
We will determine whether to divide the House once we have heard the Minister's response to our queries.

Mr. Spencer Batiste: I shall speak briefly, in deference to colleagues and the hour of the night.
Given the potential importance of the subject, it is important that certain things are placed on the record. I speak as a solicitor. Although I have not practised in litigation for many years, I have watched closely developments in the law.
The justice system is currently prone to serious problems, particularly in relation to civil litigation. They relate basically to access to justice and the cost of it. The proposals seek to address those two elements.
The problem that faces most people is that, if they do not qualify for legal aid, they can barely afford litigation. A large proportion of the population is therefore precluded from civil litigation.
There is an even worse injustice. An individual who is sued by a person who has legal aid is in an unenviable position even if he wins. It is often the case that the person being sued—the defendant—is only slightly wealthier than the person who sues him. Those problems must be solved if we are to have a modern justice system.
In the United States, there have been many pitfalls and abuses that do nothing to enhance the United States justice system, but bring it substantially into disrepute. The Government must be congratulated on striking a balance, in the legislation before us, which avoids the pitfalls of the United States and tries to divine the best of the lessons that must be learnt from the American experience while adapting them to the United Kingdom's specific institutions.
It seems to me that many practitioners in the law will be prepared to take on conditional fee litigation in the types of cases where the odds of success are roughly 50:50. It seems to me that they should not take up cases where the odds are significantly less than that, because that tends to lead to the vexatious litigation that takes place extensively in the United States.
However, there are an awful lot of people who, if they are told by their lawyers that they have a 50:50 chance of winning, simply cannot afford to take the risk of litigating. The regulations that we are discussing tackle that problem. In giving an uplift to fees rather than giving a share of damages, one avoids the excesses of the United States, where lawyers have a direct stake in the amount of damages that will be won.
The controls and caps that have been introduced, which will be introduced in detailed regulations by the Law Society and, potentially, by the Government, will avoid the abuses that have been described by the hon. Member for Brent, South (Mr. Boateng).
However, it is important that that type of litigation is widely used and available for people who at the moment feel that they have no recourse to justice. If the terms and conditions of the order are made more restrictive than they are now, they will not be used. I believe that the balance is right, and that the legislation should be passed as it is. Obviously, it should be kept under close surveillance. If further adjustments are necessary in future, so be it, but it is an excellent first attempt at what should be an important step in modernising justice in Britain.

Mr. Alex Carlile: I should start by declaring an interest, as a practising barrister who does a certain amount of personal injury litigation in the course of my practice.
There is no reason why new systems should not be introduced which increase the availability of justice and access to justice, as the hon. Member for Elmet (Mr. Batiste) said. If that system will work on that basis, it should be welcomed. The question is, will it work and what will it replace, if anything?
As to whether it will work, the Parliamentary Secretary was kind enough to give way to me during his opening speech, but his response was an extraordinarily skittish one for a Minister speaking from the Dispatch Box. The usual purpose of asking questions of Ministers in the early stages of a debate is so that the debate can be informed. The Parliamentary Secretary deliberately chose not to inform the debate.

Mr. John M. Taylor: rose—

Mr. Carlile: I will give way in a moment.
The Minister deliberately chose not to inform the debate during his opening speech in such a way that his answer could be considered during other speeches in the debate. He told us that he would inform the debate of the answer to my question when he came to reply to the debate—if that happens.
I will give way to the Minister in a moment, but I would ask him to tell us what the uptake has been in Scotland. I suggest to him that the uptake in Scotland has been disappointing. Conditional fee arrangements have hardly been used in civil litigation in Scotland. It is incumbent on the Minister to tell the House what the Lord Chancellor's Department has done to try to ensure that the measures are not simply a paper tiger, as they are in Scotland, but bring more people into the courts with their claims.
Now I will give way to the Minister, if he will answer the question.

Mr. Taylor: I invited the hon. and learned Gentleman to give way to me a moment ago because I did not want to leave him with the impression that I had sidestepped his question, at the time when he posed it, out of any disrespect for the House or any unwillingness to answer his question. From time to time, there is a place in the House for candour. I did not answer the question at the time because I did not know the answer. I have no statistics in front of me, but I do not think that the hon. and learned Gentleman put his question in a statistical form and I will not reply in a statistical idiom.
I understand, upon advice, that the Scottish experience has been that the take-up of what I think is called the speculative fee system in Scotland has been fairly limited. It has not been overwhelming or encouraging—those involved have not been run over by the weight of the business. But I also say in precisely the same spirit—again, not statistically, but in good faith to the hon. and learned Gentleman—that there is quite a body of anecdotal evidence that there is a willingness in England and Wales to take up the scheme with some enthusiasm. As the hon. Member for Brent, South (Mr. Boateng) asked, am I—the Minister—and the Lord Chancellor's Department prepared to keep matters under review? We certainly are—but we have got to give the scheme a try.

Mr. Carlile: I am grateful to the Parliamentary Secretary for his candour. But it seems extraordinary that the Government have brought forward an order and regulations for conditional fee agreements without inquiring fully into the way in which the system works in Scotland and making adjustments to the English and Welsh situation to take into account Scottish experience.
The position is even more dramatic than the Parliamentary Secretary's anecdotal answer suggested. In Scotland, speculative fee agreements are hardly used at all. One could probably count up the number of such agreements that there have been since they were introduced on the fingers of two people's hands.

Mr. Garnier: Will the hon. and learned Gentleman give way?

Mr. Carlile: I shall give way to the hon. and learned Gentleman in a moment. It is a pleasure to see him present. He is to be congratulated on having recently been admitted to silk. The hon. and learned Gentleman is an expert—indeed, a foremost expert, as has recently been confirmed—in the law of defamation and specialises in that sphere of practice.
One matter which concerns many is that the conditional fee arrangements do not apply to defamation actions of any sort. Legal aid is not available for defamation cases. Many people of modest means find it impossible to bring proceedings, particularly against big guns such as newspapers, when they have been seriously defamed, because legal aid is not available and they cannot find a generous backer for their claim. Does the hon. and learned Gentleman agree that that is an aspect of the regulations which needs to be reconsidered?

Mr. Garnier: I am grateful to the hon. and learned Gentleman for his kind words, but the question that I want to ask him does not relate to defamation. He has clearly studied the Scottish position with some care. Can he tell the House, from his studies, what is the position where a lawyer acting for a contingency fee plaintiff is unsuccessful? What happens to the successful defendant? From whom does he recover his costs? Does he recover his costs from the effectively maintained plaintiff, from the maintaining lawyer or not at all?

Mr. Carlile: My understanding of the situation in Scotland is that he recovers his costs, and that where he recovers them from depends on the nature of the agreement entered into.
I must reflect a little disappointment that the hon. and learned Gentleman did not answer the question about defamation with which I tempted him.
The agreements referred to in the Conditional Fee Agreements Regulations 1995 are both complex and far from what I think was originally in mind when the Lord Chancellor introduced the proposals which eventually formed the Courts and Legal Services Act 1990. The agreements that will be permitted will not be conditional on the case being successful, either by judgment or by settlement out of court. The agreements include a situation in which the litigant will have to pay certain fees to his or her lawyer in any event. That is clear from regulation 3(c), which provides for payment
upon partial failure of the specified circumstances…irrespective of the specified circumstances…and upon termination of the agreement for any reason.
That will put rather unequal power in the hands of lawyers entering into conditional fee agreements because litigants who can find no assistance elsewhere might well find their lawyers placing agreements in front of them that will require payment of the lawyers' costs in part in any event. One does not have equal bargaining power.
I do not know what consultations the Lord Chancellor's Department has had with the Law Society and the General Council of the Bar on these matters, but it is extremely important that the enthusiasm of the Consumers Association should be tempered by such considerations. It is vital that such agreements should be entered into at arm's length, under strict controls and in fair circumstances.
Before I give way to the Minister, I will ask him another question. Can he confirm that, if a plaintiff enters into a conditional fee agreement—for example, in respect of a medical negligence action which may involve enormously expensive expert witnesses, and these days good experts attending court tend to ask for at least £1,000 a day—and that plaintiff wins his case, he will be able to recover all his costs, including the uplift from the other side? If that is the case, and it seems right from the plaintiff's viewpoint that that should be the position, how does the Minister justify to the defendant's side that they may be paying double the costs in such an action? What is the solution to that conundrum?

Mr. John M. Taylor: I shall need to reflect on the last point that the hon. and learned Gentleman put to me. On the first point, about the mismatch in bargaining between the lawyer and the client, the hon. and learned Gentleman needs no law lectures from me. His attainment as a lawyer is probably well beyond mine, but he will be familiar with those relationships known as uberrimae fidei, or of the utmost good faith, in which the doctrine of undue influence comes into play. The hon. and learned Gentleman will know from his learned studies that, if a solicitor exploits the relative weakness of his client in those circumstances, the outturn will be determined contra preferentem, or against the person advantaged, or in other words against the solicitor.

Mr. Carlile: The hon. Gentleman, from his experience as a high street solicitor—[Interruption.] I believe that the address of his office was the high street in Walsall. He will know from his considerable experience and expertise—and it happens to all Members of Parliament—that allegations of undue influence are extremely difficult to prove, although many of us come across them on a regular basis in respect of probate matters which are brought to our constituency surgeries.
The doctrine of uberrimae fidei will not give a great deal of comfort to ordinary litigants. In the fastnesses of Montgomeryshire, people think of nothing but uberrimae fidei as they drink their tea and enjoy the Barra Bridd.
I also suggest to the Minister that there is real concern that proceedings before the civil courts are to be consigned to conditional fee arrangements as civil legal aid is allowed to wither on the vine. Will he give a commitment on the part of the Government that such agreements are not intended to deal with everyday run-of-the-mill cases? Those arrangements are intended to deal with the residue of cases where legal aid may not be available or where the litigant may be just above the legal aid means test limit and is thus deprived of that remedy unless some other mechanism is found.
I turn to proceedings before the European Commission of Human Rights and the European Court of Human Rights. The Minister will know that that is a very specialised and difficult field of practice. It is also a potentially very expensive field of practice because one pays the price for the expertise that one receives. Very few lawyers in this country—I doubt whether there are any in the House—can claim to be expert in those matters, other than possibly the Attorney-General, whose services are not available to the ordinary litigant. I believe that the Attorney-General and the Solicitor-General have appeared before the European Court of Human Rights from time to time.

Mr. Austin Mitchell: And lost.

Mr. Carlile: And lost occasionally, as the hon. Gentleman—who cannot wait to have a go at the lawyers in his usual fashion—says from a Sedentary position.
It seems to me that the best and soundest route politically to the European Court of Human Rights is through legal aid rather than a conditional fee arrangement. There is a real risk that conditional fee arrangements will prove a very unsatisfactory way of dealing with such complex matters. Surely our society should be prepared to extend legal aid to those very few cases which make their way to the European Commission and to the even fewer which make their way to the European Court.
In conclusion, I wish to address the types of lawyers—particularly the types of solicitors—who will take on those arrangements. There are some excellent solicitors, some very bad solicitors and a great mass of competent solicitors in the middle. All those who have practised at the Bar over the years will know of the existence of what one might loosely call the "dodgy solicitor".

Mr. Gary Streeter: Or dodgy barrister.

Mr. Carlile: Does the hon. Gentleman wish me to give way or will he withdraw that remark, which I understand was directed at me?

Mr. Deputy Speaker: Order. I did not hear the remark as I was speaking to the Clerk at the time. I do not know what the hon. Member for Plymouth, Sutton (Mr. Streeter) is alleged to have said.

Mr. Carlile: I will not pursue the matter, Mr. Deputy Speaker.
There is a real fear that dodgy solicitors, and perhaps occasionally the odd dodgy barrister, may be more prepared than others to take on this type of agreement, and there is thus a risk that lawyers of lesser quality will build practices in this area. I ask the Minister to assure the House that the issue has been or will be discussed with the Law Society as well as the General Council of the Bar.
Despite the criticism which is sometimes very justifiably levelled at lawyers, we are quite proud of the quality of the legal system in this country. The American lawyers who came in droves to advise us about the then Courts and Legal Services Bill which was before Parliament strongly recommended against conditional fee arrangements. Will the Minister give an assurance that the quality issue will be addressed so that real scrutiny can take place and we may ensure that, when the agreements are used, they are used properly?

Mr. David Harris: As a layman, I hesitate to rush in where my honourable and learned colleagues fear to tread. However, I share some of the apprehensions that have been expressed during the debate. My hon. Friend the Member for Elmet (Mr. Batiste) put it well when he said that no hon. Member wishes to rush down the American road in this area. We do not want to see litigation multiply at an alarming rate on the basis that, if a lawyer does not win the case, he or she will not receive a fee. As constituency Members—that is how I approach the issue—we have all come across constituents who believe that they have a right to justice, that they must therefore be supported, usually through legal aid or some other means, and who want to take their case to the ultimate body, which normally means the European Court of Human Rights or the European Court of Justice. They do not know the distinction between the two.
This is my fear about the order. We may end up with litigation which will bog down our courts and buoy up people's expectation that they will win, when they probably will not. We must guard against that danger. As the hon. and learned Member for Montgomery (Mr. Carlile) fairly said however, some people have an absolute right, as we would all agree, to pursue their case, but for one reason or another they cannot do so. That is the dilemma facing the House.
I am minded to vote for the order because the Government have approached it with due caution and have probably struck the right balance in a difficult situation, but I should hate the outcome of the debate to be that the House encourages people to go to a lawyer, saying that perhaps there are dodgy solicitors and barristers—I would not know about these matters—who will take up their case and fight it to the ultimate. As the hon. and learned Gentleman warned, however, there may be a downside and those people may have to pick up part of the bill. We must be careful about that.
I shall vote for the order, but I do so with some trepidation because I do not want us to go down the American road, which has led to increasing litigation, with everyone feeling that they have a right to go to the courts at someone else's expense, although it might be at

their own expense. I do not want that to happen. I shall vote for the Government's proposals, but on the basis that real dangers exist in pursuing the American example.

Mr. Austin Mitchell: I speak as a non-lawyer who takes a close interest in these issues. The danger with all legal service matters, particularly here, is that policy and legal services will be formulated exclusively by lawyers, who have a vested interest in maintaining their income. The voice of the consumer—the people—is never heard. That domination by lawyers is damaging.
Admittedly, tonight many lawyers have spent most of their time criticising dodgy lawyers—they should know their own trade. Lawyers always safeguard themselves against each other, but never take account of people's interests, which should be dominant when we approach this important issue.
Tonight, we are expanding the range of available legal services in a way that does not cost much and that will introduce an element of competition to serve the people. In some respects, I am qualified to speak because I have a history in the argument. This debate is like a class reunion of those who attended the debate on the Courts and Legal Services Act 1990. Five years on, the class is as old and as repellent as ever, but it brings together the arguments. The order results from that Act.
When some of us argued for contingency fees on the American pattern, the Lord Chancellor proposed this canny Scottish idea. He said that it would be an alternative to the full flowering of contingency fees and that we should build on the Scottish precedent. I am happy to go down that road. The fact that we first took that road in 1990 but only now are considering the order shows the slowness of change. What the hell has been going on? Why has it taken so long? I can imagine all the grudging discussions and the acquiesence in getting these measures past the judges, but this incredible series of delays shows how difficult it will be to bring the full flowering of legal services to the people.
I argued for contingency fees. When I visited the United States to lecture for the English Speaking Union, I was impressed by the effectiveness of contingency fees in the hands of crusading lawyers. I know that they are much criticised as ambulance chasing but I saw, particularly in the southern states, crusading lawyers who were prepared to push cases at enormous risk and expenditure to themselves, on the basis of contingency fees. Without those fees, the cases would not have been pursued. We need similar endeavour in this country, because that would bring legal services to the people in a way that nothing else can.
We will never return to the days of wide-ranging legal aid services of a few years ago. The Lord Chancellor began brilliantly—and I am still a strong supporter of his—but increasingly he is becoming Treasury-driven. That means meanness towards legal aid. We must accept as a fact of life that legal aid provision will decrease. Legal aid can never work as a full and adequate form of funding as long as it is drained off into the bottomless pit of private practice. As long as we support private practice, it will be expensive to provide legal services to the people. I hope that Labour will spend more on legal aid and will


commit itself to wider provision. However, even Labour will never attain the full range of legal services that would obviate the need for some kind of additional service
Legal aid will never be adequate, so we need measures to defend the causes, interests and concerns of the people. The legal system is pricing itself out of the market. It will never be adequate until we have an employed legal service—a public defender service for criminal matters and an employed legal service at law centres for civil matters. I would like law centres to participate in conditional fee arrangements.
Until we have full provision of legal services, these measures are a beneficial step towards the American system. We have not yet tackled the costs problem. If we are going down the American path, I see no reason for not pursuing the same path in respect of costs. Why should they be allocated against the losing side? A sensible compromise has been reached—to allow a case to go forward without the risk of costs—with which I am happy.
I am happy with the range of uplift, because, since there is a range of cases, a degree of risk and a range of possibilities, it is sensible that fees should approximate to that gradation of risks. I should like all cases to be pursued. I do not see why only those with a 50:50 chance of success should be considered because the boundaries widen all the time. Until we extend those boundaries by taking more risks, we shall never know what cases will be successful or not. Why stop at 50:50? Why not include 60:40 or 70:30 cases? All such cases need pursuing.
I like the word "uplift" in respect of lawyers' fees. The next time that I meet members of the Law Society I shall ask them specially about their uplift. It makes me think of the Church of England, which is a very uplifting institution. The Law Society will clearly become a much more uplifting institution under this new system. It is fair that the uplift is gradated as the regulations provide. The uplift has to be agreed by the client and, indeed, it is subject to an appeal—ultimately, effectively, by the client.
I am worried, however, by the telling point made by the hon. and learned Member for Montgomery (Mr. Carlile). When I consider such matters, my test is, "How will it work in Grimsby?" When people want to pursue a case against a hospital, a medical practice or whatever, they shop around among solicitors. If there is provision for the charging of fees in such cases and if there has to be an agreement, not only on the level of uplift but on what fees are charged, a conspiracy—a ring of lawyers—could develop. Solicitors could say, "Let's charge them this. Let's charge them that. Let's not take any case below a certain level of uplift." That is the danger.
How will the provisions work in a town such as Grimsby? In such a scenario, the less power given to solicitors to increase the uplift and the charges to the client, the better. We must have and encourage full and free access for the people of Grimsby to the legal services they need to defend themselves against powerful major institutions. The more the system becomes one of haggling and quibbling, the greater the potential of a conspiracy against the public and the people of Grimsby.

Mr. Michael Stephen: Does the hon. Gentleman accept that he does an injustice to the solicitors of Grimsby? Does he accept that competition between

solicitors is very fierce indeed and that, in fact, it is driving charges to the consumer down almost to the point at which some legal practices are becoming non-viable?

Mr. Mitchell: There is a conspiracy against people in many respects. There was clearly a conspiracy on fees for conveyancing until it was broken by ending the conveyancing monopoly and introducing fair competition. As long as lawyers have a monopoly, there is danger of a conspiracy. I might be exaggerating, but I do not want to give them any leverage that might enable them to conspire against the people.
In a big city, there is more competition and solicitors might be prepared to stand up and say that they are willing to take a risk, but I do not want the people of Grimsby to have to go to Leeds or Sheffield for legal advice because only there can they find an independent, determined solicitor who will take on the system and exact less demanding terms from them than a local conspiracy of solicitors. Small towns lead to conspiracy. I am afraid that that is true of so many professional services and I do not want to give the legal system any cause to follow suit. The hon. and learned Member for Montgomery was quite right to raise that point.
The system will bring a better legal service to ordinary people than legal aid. Legal aid is, in any case, contracting. It is becoming less adequate and it often tends to be the sort of provision which has fallen off the back of the practice. I am perfectly happy to accept 100 per cent. uplift, if it would mean that cases were pursued which would not otherwise be taken on. That is the important point.

Mr. Oliver Heald: Will the hon. Gentleman give way?

Mr. Mitchell: No. I am, believe it or not, grinding to a conclusion.
The hon. and learned Member for Montgomery said that the process was little used in Scotland. Scotland does not have a system that provides for costs like the insurance system in this country. In addition, the system will be used increasingly as the boundaries of legal aid contract. The system will be an attractive alternative and I am happy to support it.
With the right degree of muscle, my hon. Friend the Member for Brent, South (Mr. Boateng) said that we would wait for the Minister's reply. I will not anticipate his reply and I will support the measure whatever the Minister says because it is a step on the way to solving the desperate need to bring more effective legal services to the people of this country.
I do not want the measure to be unduly restrictive, and I am worried about the restrictions that it contains. I regard it not as the end, but as the beginning. It is only a step on the way, but it will allow people to advance cases that would not otherwise be taken up. It is a step on the way to a paid legal service which will reach the parts that conditional fees cannot reach. I still want to move down that track. There is still a need to adopt the full American system of contingency fees where they take a slice of the winnings. Why not do that if it brings legal services to the people?
On the basis that the proposal is an advance and something that can be built on, improved, expanded and developed, we should support it.

Mr. John M. Taylor: If there is a Division tonight, it will be interesting to see whether the Labour party fields one Member in each Lobby and, if so, where the Lib-Lab accrual will take place.
On a more serious note, I congratulate my hon. Friend the Member for Elmet (Mr. Batiste), who summed matters up so neatly and eloquently that I shall take Hansard tomorrow to read his in-a-nutshell treatment of what the Government are trying to do.
The hon. and learned Member for Montgomery (Mr. Carlile) extended to me the courtesy of endeavouring to deal with some of his questions in interventions during the debate. He also asked me to reassure the House that conditional fees are not intended to supplant legal aid and I am very pleased to do that on behalf of the Government: They are not intended to replace legal aid in any way. They are intended to complement legal aid, to provide an extra choice to the consumer, a greater versatility and a variety of options to people who find it hard, difficult and expensive to go to law.
With regard to the point made by the hon. and learned Member for Montgomery about whether clients would be advised fairly in those circumstances, I draw his attention to the narrow point, which is squarely met however, by regulation 4(2)(a) of the regulations, which states that one of the things that the client must be advised on is whether he or she
might be entitled to legal aid in respect of the proceedings".
That is, as it were, built into the script.
The hon. and learned Member for Montgomery told us of his experience of American lawyers coming to this country and advising against contingency fees in 1990. He is right. American lawyers advised against contingency fees where the reward to the lawyer is based on the damages. In advancing conditional fees, we are promoting a scheme where the reward to the lawyer is proportionate to the fee agreed with the client or awarded against the other side by the court.
The hon. Member for Brent, South (Mr. Boateng) quite rightly deployed arguments in favour of the protection of the client. While waiting to reply to this debate, I considered whether I should answer his questions by reading a substantial passage from the longer speech that I had thought of using tonight. On reflection, I think that the regulations are far more specific than my text, and I therefore commend to the hon. Gentleman regulations 3 and 4, which set out definitively the protection of a client who is entering into an agreement.
At the risk of saying this twice, I advise the hon. Member for Brent, South and the House of the

long-standing doctrine of undue influence, whereby in cases where one party's solicitor is in a greatly advantageous position against the client, the rules of interpretation favour the weaker party, as they should. I have said that we will keep the matters under review.
I was requested to comment on the insurance arrangements. The Lord Chancellor's Department has discussed the insurance scheme with the Law Society, which has made it clear that it is willing to provide details of the scheme to anyone who is interested in it.
My hon. and good Friend the Member for St. Ives (Mr. Harris) usefully made the distinction between the European Court of Human Rights and the European Court of Justice—a distinction that is often overlooked. The different roles, constitutions and cultures of the courts are not widely known.
My hon. Friend also referred to the "American road" down which he feared we were going, and that qualified his welcome for the measure. I understand that, and I thought that he spoke fairly, but the American example is of lawyers' rewards that are geared to damages. We eschew that, and are interested in lawyers' rewards geared to the original base fee agreed, or to the costs awarded in the case by the court.
The hon. Member for Great Grimsby (Mr. Mitchell) is a member of the class of 1990, as I am, and he has a record in these subjects as long as your arm. He possesses creditable form in the issue, and always enlivens these occasions. I am glad that he felt able to support the measures, because in the name of fair play he has been one of the agents of reform. He says that reform has gone too slowly, and that it has taken since 1990 to get to where we are tonight. I understand his taking that view, because he was never content with the pace of progress.
I find myself criticised in some quarters for haste, and in some other quarters for leaden-footedness. I cannot win, which probably means that I will not get a fee. I would like to make secure the order and the regulations tonight.

Question put and agreed to.

Resolved,
That the draft Conditional Fee Agreements Order 1995, which was laid before this House on 20th April, be approved.

Resolved,
That the draft Conditional Fee Agreements Regulations 1995, which were laid before this House on 20th April, be approved.—[Mr. John M. Taylor]

Orders of the Day — Employment (Waveney)

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

Mr. David Porter: I would like to thank Madam Speaker for the opportunity to raise the matter of employment in Waveney, in particular the barriers to employment. I am sorry that the Under-Secretary of State for Employment, my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice), is unwell and cannot reply to the debate, as he knows something of my constituency in addition to what his officials tell him. I am delighted, however, that my hon. Friend the Minister of State is here to reply, and I am grateful to her.
Clearly, unemployment nationally is falling, but the perception in Waveney is that we are still in dire straits economically. Unemployment in Waveney from March 1994 to March 1995 fell by 3 per cent., but that is not the perception locally. Politics is all about perception, and that is why I want to bring to the attention of the House some aspects of Waveney's particular circumstances. I do not want to be guilty of the same charge that I sometimes level at my local authority of running my area down, but some unique circumstances need attention.
My constituency association recently did a survey in a residential area, and the overriding concern on the doorsteps was local employment. When I visit schools, the overwhelming issue for all youngsters approaching school-leaving age is local employment and the inevitability of having to move away to work. In a constituency where the majority of people are still native born and bred, that is a serious factor in the political equation.
SCEALA, the Standing Conference of East Anglian Local Authorities, found last year that the region is beginning to recover from recession, but the Henley centre for forecasting put Waveney among the worst economic prospects for Britain, along with Liverpool, Gateshead and south Tyneside.
Historically, Waveney developed around the fishing industry at Lowestoft and agriculture in the hinterland. By the 1970s, the whole economy had become dependent on oil and gas offshore, shipbuilding, fishing, food processing and tourism. By 1981, we were the most industrialised district in Suffolk. Since then, there has been a 19 per cent. reduction in the proportion of the work force employed in manufacturing nationally, but a 26 per cent. reduction in Waveney.
We know that no one owes the country a living, so it certainly does not owe Waveney a living. We know that. We know the stark modern facts on industries—that, in general, the time between the sunrise and the sunset of an industry is getting smaller. We know that. We know the reality on national manufacturing figures—7 million jobs in 1979 and 4 million today, but the 4 million make more than the 7 million did, and all because of technology, which we cannot uninvent or even slow down. We know that. But Waveney's dependence then and still on a declining manufacturing base makes prospects seem much bleaker.
The UK national average of manufacturing employees in the work force is 22 per cent.; in Waveney it is 27 per cent. There has been some service and high-tech industrial

development, and some firms are doing very well. I should list some of them for the record. They are SLP,
Kvaerner Oil and Gas, Birds Eye, Clays of Bungay, Harrod's of Lowestoft, Sanyo, Adnams of Southwold, Bernard Matthews, M and H Plastics, Fibernyle of Beccles, and a host of smaller firms. We know that.
We know that in a vibrant economy, businesses collapse and are taken over, and new ones are born. We know that. Recent contracts won by SLP Engineering and Kvaerner Oil and Gas are very encouraging and welcome, but they cannot solve the problem of the economy being dependent on a small handful of sectors. Help for diversity and training and retraining to diversify is what is needed now.
We also know that we are the most easterly point of the United Kingdom, yet we are only 120 miles from London. In some ways, it might as well be 1,000. I have said that before many times in the House, and the previous time I said it, I was rewarded with a cartoon in the Lowestoft Journal portraying me as Indiana Jones trying to get from there to the House.
That is part of the charm of the area—I accept that—but the lack of reasonable roads, either the A12 north to south or the A47 upgraded as a major European route east to west, and the want of the third crossing at Lake Lothing at Lowestoft, all combine to hamper economic growth, compared with other parts of the country. That is the perception of businesses, and of people in the tourist and job-creating sectors of the community whom I talk to and whom I represent in the House.
We have fallen victim to a freezing of the roads programme and a changing of policy on roads, which might be right in national terms, but it is welcomed only by areas that already have reasonable roads. We are just 26 miles from Norwich, which is our regional and economic centre. Norwich itself has suffered enormous job losses recently. Norwich Union is to cut 20 per cent. of its work force during the next 12 months. The Nestlé Rowntree factory is closing, with 900 jobs going. Colemans of Norwich is up for sale.
I do not say that all the Norwich economy is bad—it certainly is not. Again, the picture in Norwich is much the same as that which I have portrayed in Waveney—a host of firms are doing well—but it is the perception that all are not doing well that does not help to boost business confidence. In a sense, the whole of Norfolk and north Suffolk belies the image of prosperous East Anglia which so many people from outside the area have. That is perhaps why many people in the area are unfortunately voting Labour, tragic though that is.
Jonathan Sisson, the president of the Norfolk and Waveney chamber of commerce and industry, recently launched a debate about our local economy. He centred it on two arguments. The first was that it was time to lower the drawbridge on Fortress Norfolk and Waveney and end the view that the isolated nature of the area and the quality of our life compensate for economic stagnation. The second was that the road and rail infrastructure needs to be dealt with. He understands, as we all do, that growth is as essential for the economy locally as it is nationally. When we do not achieve that growth, commensurate with our location, population and assets, something is wrong. When we are 80 miles from the motorway network, and when it is quicker to get to Amsterdam than to London or Birmingham, all is not quite right.
I hope that my hon. Friend the Minister of State will consider what I am saying from an economic and employment point of view and pass those thoughts to the Department of Transport when the roads programme is reviewed again next year, not so that East Anglia is covered in roads, but to put what we have got on the competitive level of other parts of the country.
From her position, my hon. Friend the Minister will know of the decline in employment. In 1991, the Rural Development Commission identified Waveney as an area likely to suffer further agricultural job losses. She may also realise how much fishing has suffered, too. One hundred years ago, there was a fleet of 500 boats; today, there are fewer than 20 beam trawlers. One thousand jobs have been lost in the fishing industry in the past 12 years alone. I do not blame the Government alone for that. It is part of the global decline of the fishing industry as technology and mechanisation have improved. However, the common fisheries policy, as my hon. Friend the Minister will not be surprised to hear me say, has failed to conserve fish stocks. I believe that it should be scrapped so that we can start again.
Worse than that for Lowestoft is the fact that a plaice swap has been imposed by the Government, which will take £1 million-worth of plaice out of the fish market and run the fleet out of quota by the autumn. As a consequence of the CFP, to which the Government are so wedded, there will be no fishing industry left before long—or perhaps I should say that there will no British fishing industry left before long. It is a further barrier to employment, economic development and business confidence and contributes in many people's minds to the feeling of a spiral of decline and decay. The much-vaunted decommissioning scheme encourages owners to make fishermen redundant and puts merchants into bankruptcy.
Waveney failed to win assisted area status, whereas neighbouring Great Yarmouth succeeded. I am delighted to see my hon. Friend the Member for Great Yarmouth (Mr. Carttiss) here tonight. I do not complain about Great Yarmouth's success in this instance, because, on the day the figures were set, Great Yarmouth's unemployment was greater than that of Waveney. However, my hon. Friend and I put it to the Minister that the areas should have been treated equally—both, or neither, should have received assisted area status. We have, however, been awarded objective 5b money, which could be a very big boost. To be fair, the local authorities, the training and enterprise council and the private sector are coming up with ideas for the money.
The sad thing is that it is now necessary to have that money, that kind of life support. We are pleased that the Government have approved it—the European Union will now give some British taxes back to us—but it would not have been necessary had the Government funded our infrastructure improvements at the same time as those of other parts of the nation.
There is much that we can do to help ourselves, and it is being done. The trade unionists to whom I talked last week, the local authorities, the major employers and the smaller job creators are all singing from the same hymn book, although I wish that our local authorities spent less time employing people on poverty strategies and concentrated more on driving down the council tax.
There is a determination locally to use our natural assets better. Kvaerner has come only recently to Waveney because of its location and the quality of the work force. The Government can lend two helping hands. First, they can keep inflation down, keep interest rates stable and business taxes low, deregulate and privatise, help with training and retraining and resist the minimum wage. All that they are doing but, secondly, they could remove the extra barriers that we have and that other areas of structural decline do not have. I have already mentioned poor road and rail links and the common fisheries policy, but additional barriers are the special assistance schemes to our competitors at our expense and excessively zealous bureaucratic enforcement of rules and regulations. No magic wands are asked for or expected, only a fair deal.
The area is almost the closest part of the United Kingdom to the rest of the single market. We should be able to use that advantage our way. Nobody predicted 25 years ago that tourism would be the great job creator that it is today. In Waveney, about 3,800 jobs—10 per cent. of the work force—are in tourism-related work, even though it is sometimes seasonal, short-term, part-time or low-paid. No one can predict how the future will produce the work that the country needs, including the 4,500 new jobs that Waveney needs in the next 10 years to stand still.
In the meantime, I urge my hon. Friend the Minister to do her best to help Waveney to pull down some of the barriers to employment that need not be there, so that we can fight fair.

The Minister of State, Department of Employment (Miss Ann Widdecombe): I congratulate my hon. Friend the Member for Waveney (Mr. Porter) on securing the debate. I thank him for raising the issue of employment in his constituency. It is only right to record the interest shown in the debate by my hon. Friends the Members for Great Yarmouth (Mr. Carttiss) and for St. Ives (Mr. Harris). The defence of the British fishing industry by my hon. Friend the Member for St. Ives has commanded much respect in the House.
As my hon. Friend the Member for Waveney knows, the number of people out of work fell again in March, to its lowest level since June 1991. That was the 19th month in a row when there had been a fall. Furthermore, throughout the country employment is growing. Nearly 300,000 more jobs were created in the past year, and over 200,000 were in full-time positions. In the United Kingdom as a whole, unemployment has fallen by over 600,000 in the past two years. East Anglia has shared strongly in that improvement. Indeed, it has the lowest unemployment rate of all UK regions.
My hon. Friend paid tribute to the attractive areas of East Anglia, including Waveney, the constituency which he represents. My hon. Friend the Under-Secretary has sadly been prevented from replying to the debate due to a dislocated shoulder. He is familiar with the area and I cannot compete with his familiarity with it. He assures me that it is an area that provides a wide range of wildlife habitats, waterways and tourist attractions, to which my hon. Friend the Member for Waveney referred.
I recognise that Waveney has some special difficulties, and my hon. Friend the Member for Waveney has eloquently described them. At the same time, many


positive things can be said about the district in economic terms, to which I shall return to focus upon if time permits.
I know that, for many years, agriculture has been the staple industry in the area. I am aware also that the fishing industry has traditionally played a major part in the prosperity of the local coastal towns. Tourism is also important. I am sure that the seaside resorts on the East Anglian coast are beginning to see the holiday makers emerge as the weather becomes warmer and brighter.
Even in a prosperous region such as East Anglia there will still be areas of high unemployment if the traditional local industries decline, especially if they decline more quickly than new ones grow to replace them. Similarly, all industry needs to modernise and invest to compete at a European and world level. That means that many traditional, existing industries, such as fishing and farming, cannot always be sustained with the same employment levels that they have enjoyed in the past. I am pleased that those problems have been recognised in the granting of assisted area status to Wisbech, Harwich, Great Yarmouth and Clacton. That entitles them to apply for regional selective assistance.
I am sorry that Lowestoft was not successful in its bid for assisted area status. I can assure the House, however, that my Department is aware of the employment situation in the area. There is no single factor that determines eligibility for assisted area status. Decisions on the map were not taken on the basis of an automatic statistical process. Current employment, as well as the unemployment rate over the past five years and the level of long-term unemployment, were taken into account, along with several other factors.
More recently, Lowestoft and parts of the Waveney valley, and three rural areas—the Fens, central rural Norfolk and rural east Suffolk—have been awarded European Union objective 5b status, which will entitle them to £46 million of extra resources over five years for projects to diversify their economic base. I understand that a wide range of organisations in the area, including the TEC and district council, recently submitted bids to make best use of that newly available funding. The European programme PESCA will also assist the fishing industry in Lowestoft to cope with the current structural difficulties by diversifying coastal regions.
We all appreciate that economic change brings difficulties for industries and those who work within them, but change should not always be portrayed as a negative process. The business community in East Anglia and Waveney is resourceful and enterprising and, over the years, a broad economic base has developed with a wide variety of industries, including a high number of manufacturing industries, particularly in the Waveney area. Those are not only vital for local prosperity, which so concerns my hon. Friend, but important for the economy of the UK as a whole.
That is undoubtedly why the region has one of the highest rates of employment in the country. I prefer to say "employment", as my hon. Friend did in his title for this debate. We should all talk much more about employment. That is the important issue, whether it be in Waveney or elsewhere in the country.
We take the problem of long-term unemployment very seriously and it is worth pointing out that between January 1994 and January 1995, the latest period for which we

have statistics, the number of people out of work for more than a year fell by 19 per cent. in the eastern region, compared with 15 per cent. across the UK as a whole.
The Government have a number of initiatives to help long-term unemployed people, in addition to the wide-ranging support offered by the Employment Service. For example, we have job plan workshops, work trials and the jobfinder's grant, which we announced in the last Budget. The training for work programme offers more than 1 million training opportunities every year. It is worth mentioning that many of those made unemployed in the eastern region as a result of redundancies in manufacturing, the vehicles industries, and the financial and banking sectors are extremely well qualified and would be in demand by businesses requiring high skills. That is good news for the region's economy as it returns to growth.
My hon. Friend rightly raised the issue of transport infrastructure. We are well aware of the importance of economic growth and the relationship between transport infrastructure and competitiveness. We understand that companies move 90 per cent. of their products by road, and they do it in lorries, rather than buses, trams or on bicycles. The Highways Agency has the task of delivering the roads programme, but I understand that the recent transport supplementary grant settlement for the county is perfectly fair, with 14.8 per cent. of its bid being accepted.
Substantial investment has been made in improving the major routes to and through East Anglia in view of its importance as a region in its own right but also as a major gateway to Europe. Those improvements and the Government's future proposals are an important element in improving the attractiveness and competitiveness of the area for economic development. I understand that Suffolk county council will make a package bid for Lowestoft in this year's transport plans and policies round. It has already been successful with an Ipswich package bid, and substantial progress is being made.
Perhaps I should mention some of the good economic news of which I am aware in the Waveney district. Despite its difficulties, unemployment has fallen in the Waveney constituency and 194 fewer people are registered unemployed than a year ago. We acknowledge that unemployment in the Lowestoft travel-to-work area is still too high. The Employment Service and the TEC will do all that they can to promote enterprise and help local people get back to work. The unemployment rate, which is down 1.1 per cent., has fallen across the East Anglian region and 11,359 fewer people are now registered unemployed than a year ago. As I said, the unemployment rate in the region is the lowest in the country at 6.8 per cent.
New jobs have been created in the region. For example, a multi-million pound offshore contract to design and build a 2,000 tonne accommodation module has been secured by SLP Engineering, which was mentioned by my hon. Friend. That will secure the jobs of 225 workers at Lowestoft and could create new jobs. The Norwegian offshore giant, Kvaerner, is bringing new jobs to its Lowestoft-based operation with a construction contract worth more than £1 million. Around 25 jobs will be created as Kvaerner Oil and Gas services works on a major contract for the port of Felixstowe. Lowestoft-based graphics firm, Supersine, is to become a centre of


excellence for screen printing. The recently launched Enterprise 2000 will also help 1,000 people to become their own bosses in the region.
During the past decade, the Rural Development Commission has been actively involved in the Waveney area. It has promoted development so that rural businesses and services can prosper and provide for the varied needs of rural communities. For example, the RDC provided £40,000 in grant aid last year to encourage the refurbishment of 14,000 sq ft of redundant buildings, which is likely to accommodate 40 jobs. That has been a typical level of grant aid.
Since the launch of Norfolk and Waveney TEC's "Train and Gain" initiative in October 1993, 727 people have been placed back in work. It offers training grants to employers taking on people who have been registered unemployed for six months or more. There are also extra

payments to encourage national vocational qualification take-up. The TEC is also operating a business expansion loan scheme, in partnership with the Midland bank. The scheme allows small companies to borrow up to £15,000 at low rates to encourage expansion and, with that expansion, new jobs.
We can concentrate on our achievements nationally, regionally and locally. There will always be room for improvement in certain areas, but the way forward to prosperity in every area of the country is through sustainable economic growth. That means the encouragement of employment policies that are not just short-term expedients but long-term solutions with long-term benefits to meet the nation's current and future needs. I believe that Waveney and Great Yarmouth will benefit from the prosperity generated.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Twelve midnight.